UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


PRACTICAL  EXPORTING 

A  Handbook  for  Manufacturers  and  Merchants 


By  B.  OLNEY  HOUGH 

Editor,  American  Exporter 

AXJTHOB   OF    "elementary    LESSONS    IN    EXPORTIMO,* 
"ocean   traffic  AND  XaADE,"   ITC. 


Seventh  Edition 


AMERICAN  EXPORTER 

Johnston  Export  Publishing  Co. 

Penn  Terminal  Building 

S70     Seventh     Avenue 

New    York    City 

Boston,  Philadelphia,  Cleveland.  Detroit,  Chicago,  St.  Louis,  San  Francisco 

1921 

76  14      6    ^ 


Copyright,   1921 
By  JOHNSTON  EXPORT  PUBLISHING  CO. 

PENN  TERMINAL  BUILDING 

370  Seventh  Avenue    Hf.w  York  City 

U.  S.  A. 


First  Edition,  September  1915 
Second  Edition,  January  1918 
Third  Edition,  January  1919 
Fourth  Edition,  February  1919 
Fifth  Edition,  January  1920 

Sixth  Edition,  December  1920 
Seventh  Edition,  September  1921 


3560 


3  0ZJd 
H  ai 

CONTENTS 

PAGE 

Introduction 1 

CHAPTER  I 
Ways  and  Means 9 

The  Many  Facilities  for  Export  Trade  Available  to  American 
Manufacturers — What  IStudies  and  Methods  are  Advantageous 
— The  Basic  Rules  in  Exporting — How  to  Learn  if  One's  Goods 
Can  be  tSold  in  Other  Countries — High  Priced  Goods  even  More 
tSuitable  for  Export  than  Cheap  Goods. 

CHAPTER  II 
Some  Mistaken  Impressions 37 

Popular  Misunderstandings  About  Export  Problems — ^Mistaken 
Ideas  as  to  Credit  Terms — Foreign  Branches  of  American  Banks 
Desirable  but  not  Essential — Lack  of  American  Ships  not  a 
Handicap  to  Foreign  Trade  Expansion — Combinations  of  Manu- 
facturers to  Get  Export  Business  by  no  Means  a  New  Scheme — 
When  American  Goods  May  be  Adapted  to  Market  Tastes  or 
Preferences. 

CHAPTER  III 
Markets  for  American  Goods 68 

Tlie  Relative  Values  of  Foreign  Markets — When  Patents  and 
Trademarks  in  Other  Countries  are  Required — Statistics  of 
American  Export  Trade — Our  Principal  Foreign  Customers — 
Trade  Practices  Which  Are  Strange  to  Us — The  Moneys  of  Other 
Lands  and  Their  Values. 

CHAPTER  IV 

The  Export  Department 96 

Specialized  Attention  Necessary — A  Separate  Department  not 
Always  Required — Who  and  What  an  Export  Manager  Should 
Be — When  and  Where  an  Export  Department  May  Be  Established 
— Reducing  Expenses  Through  a  "Combination"  Export  De- 
partment and  Manager — Office  Systems  for  the  Export  Depart- 
ment— Foreign  Languages,  Translators  and  Translations. 


CONTENTS 

CHAPTER  V  PAGE 

Foreign  Trade  Correspondence 123 

Correspondence  a  Vital  Element  in  Getting  and  Handling 
Export  Business — General  Character  of  Letters  to  and  from 
Foreign  Comitries — Inquiries  for  Goods  and  Replies  to  Them — 
Sales  Letters,  Circular  Letters  and  Follow-Up  Systems — The  Use 
of  the  Cable. 

CHAPTER  VI 
Traveling  Salesmen  Abroad 158 

Employment  of  Traveling  Salesmen  Depends  on  Growth  of  Ex- 
port Business — Successful  Factory  Salesman  Preferred  to  an  Ex- 
pert in  Foreign  Languages — Qualities  Desirable  in  the  Man  to 
Represent  Americans  Abroad — Travelers  Who  Carry  Lines  from 
Several  Factories — Conditions  Encountered  in  Selling  Goods  in 
Other  Lands — Duties  on  Samples — Salesmen's  Licenses  in  Some 
Countries. 

CHAPTER  VII 
Advertising  to  Get  Export  TrzVde 196 

The  Modern  Export  Trade  Paper  and  Its  Service  Department 
— Sundry  Export  Advertising  Propositions  and  Special  Export 
Editions — Local  Advertising  in  Foreign  Markets — The  Best  Copy 
for  Export  Announcements — Advertising  for  General  Publicity 
and  Prestige  Abroad — Results  from  Export  Advertising — Com- 
ment and  Advice  as  to  Export  Catalogues. 

CHAPTER  VIII 
Export  Commission  Houses      .........  242 

Importance  and  Usefulness  of  Export  Houses — Commission 
Houses,  Merchants  and  American  Buying  Offices  of  Foreign  Con- 
cerns— Their  Operations  as  Buyers  and  Shippers  of  Goods — Com- 
mission Houses  Considered  as  Agents  and  Introducers  of  New 
Lines — Policy  of  Giving  Such  Houses  Preferential  Treatment  and 
Granting  Special  Prices. 

,  CHAPTER  IX 

Local  Foreign  Sales  Agents,  Distributors  and  Branch 

Offices 284 

Ix)oal  Sales  Agents  Established  Everywhere — Used  More  Gen- 
erally by  European  than  by  American  Manufacturers — Are  not 
Buyers  of  Goods  and  Hence  to  be  Distinguished  from  Wholesale 


CONTENTS 

PAGE 

Distributors — Their  Functions  as  Salesmen  and  Otherwise — 
Giving  Agencies  to  Merchants,  Advantages  and  Disadvantages — 
When  and  How  Manufacturers  Should  Establish  Their  Own 
Branch  Offices  Abroad. 

CHAPTER  X 
The  Export  Order 317 

What  Samples  Mean  in  tlie  Export  Tlade  and  How  They 
Should  be  Treated — Ways  of  Quoting  Prices  and  Discounts — 
Meaning  and  Attractiveness  of  C.  I.  F.  Prices — Terms  of  Sale 
Customary  or  Advisable  in  Export  Business — Foreign  Credit 
Ratings  and  Responsibility  of  Customers — Acceptance  or  Refusal 
of  Orders — The  ilanufacture  of  Goods  for  Export  Shipment. 

CHAPTER  XI 
Preparing  Shipments 350 

How  steamer  Differ  from  Rail  Shipments — How  Cargo  Is 
Loaded  on  Board  Steamships,  Unloaded  and  Transshipped — Pack- 
ing Required  for  Adequate  Protection  of  Goods- -The  Packing 
Which  is  Sometimes  Desirable  on  Account  of  Local  Foreign 
Conditions — How  Export  Wciglits  and  Measurements  Are  Cal- 
culated— ^larks  and  Addresses  on  Packages  for  Foreign  Ship- 
ment— flaking  Export  Invoices. 

CHAPTER  XII 
Making  the  Shipi^ent 384 

Parcel  Post  Facilities  in  Foreign  Trading — Starting  an  Ex- 
port Shipment  by  Rail  from  an  Inland  Factory — Steamship  Serv- 
ices Available  to  All  Parts  of  the  World — Ship  Chartering — 
Ocean  Freight  Rates,  How  Governed  and  on  What  Based — Ad- 
vantages Offered  by  Foreign  Freight  Forwarders  and  How  They 
Operate — The  Various  Formalities  Necessary  in  Making  an 
Export  Shipment — Shipments  in  Bond — Drawback — The  Steam- 
ship Bill  of  Lading — Consular  Invoices,  What  They  Are  and 
When  Required. 

CHAPTER  XIII 
Marine  Insurance 432 

Why  Marine  Insurance  Is  Necessary — When  the  Duty  of  Ef- 
fecting Insurance  Devolves  on  Manufacturers — The  Principles  In- 
volved in  Marine  Insurance — An  Explanation  of  "General  Aver- 


CONTENTS 

PAGE 
age"    and    "Particular    Average" — Insurance    Policies    and    Cer- 
tificates  Issued   Under    Them — Peculiar   Phraseology  of    Policies 
Explained — Insurance  Against  War  Kisk — How  Insurance  Claims 
Are  Collected. 

CHAPTER  XIV 
Financing  Foreign  Business 458 

Many  Manufacturers  Accept  Foreign  Orders  Only  on  Cash 
Terms — Direct  Remittances  of  Cash  Compared  with  Letters  of 
Credit  Through  American  Bankers — Open  Accounts  Are  on  the 
Whole  Unusual  in  Export  Trade — When  and  How  They  May 
Safely  Be  Extended  to  Foreign  Customers — Drawing  Foreign 
Drafts  or  Bills  of  Exchange,  and  Their  Various  Forms — How 
Foreign  Exchange  Bankers  Advance  Cash  Against  Such  Drafts. 

CHAPTER  XV 
Credits,  Acceptances  and  Collections 496 

Credit  to  Foreign  Customers  May  be  Extended  on  Drafts 
While  Shippers  Secure  Cash — How  Drafts  are  "Accepted"  by 
Customers — Advantages  and  Security  of  Acceptances — Principles 
and  Rates  of  Foreign  Exchange — Facilities  of  Discount  Markets 
—Ways  of  Collecting  Past  Due  Foreign  Accounts. 

INDE;^.     .     ,     .     r 521 


LIST  OF  FORMS 

Note. — Documents  illustrating  the  text  are  reproductions  of  forms  in 
actual  use.  The  transactions  which  these  forms  have  been  made  to  record 
are  purely  lictitious — devised  by  the  author  only  as  types  to  illustrate 
procedure.  \Miere  names  of  established  companies  appear  none  of  them  is 
responsible  for  either  style  or  phraseology  employed. 

FOBM  FACING 

NUMBER  PAGE 

1 — Inquiry  for  Prices  from  an  Export  Commission  House     .      .      .  258 

2 — Order  for  Goods  from  an  Export  Commission  House     ....  260 

3 — C.  I.  F.  Contract  Conditions 332 

4 — Form  of  Export  Invoice -.      .      .      .  378 

5 — Statement  of  Charges  Applying  to  Export  Invoice 382 

G — Memorandum  of  Weights,   Measurements  and   Rates     ....  382 

7 — Letter  of  Shipping  and  Financial  Advice 382 

8 — Through  Railroad  Bill  of  Lading 392 

9 — Instructions  for   Shipping  Given  to   Forwarding  Agents     .      .      .  404 

10 — Foreign  Freight  Forwarder's  Bill  of  Lading 404 

11 — Way  Bill   of   Forvs^arding  Agents 404 

12 — Steamship   Company's   Shipping  Permit 410 

13 — Steamer's  Dock  Receipt 410 

14 — Shipper's  Export  Declaration 412 

15— Ocean  Bill  of  Lading,  "To  Order,"  Endorsed  in  Blank     .      .      .      .416 

16 — Ocean   Bill  of  Lading,  Delivery  Direct  to  Consignees     ....  418 

17 — Ocean  Bill  of  Lading,  Endorsed  to  Foreign  Bankers     ....  420 

18 — Steamship  Parcel  Receipt 422 

19 — Consular  Invoice,   Cuban   Form 424 

20 — Consular   Invoice,   Brazilian   Form 428 

21 — Certificate  of  Origin 428 

22 — Policy  of  Marine  Insurance 440 

23 — Certificate  of  Marine  Insurance 442 

24 — Certificate  of  Insurance  Against  War  Risk 450 

25 — Example  of  Captain's  Protest 454 


LIST  OF  FORMS 

FOEM  FACmO 

NUMBEK  PAGE 

20 — Banker's  Commercial  Letter  of  Credit 402 

27 — Banker's  Notice  of  Irrevocable  Credit 464 

28 — Banker's  Permission  to  Draw  for  Customer's  Account  ....  464 

29— Drawee's  Guaranty  to  Banker's 466 

30 — Banker's  Authority  to  Draw,  Far  Eastern  Form 466 

31 — Simple  Sight  Draft,  in  Original  and  Duplicate     ......  476 

32— Draft  Endorsed  for  Collection  Only  by  Bankers  Abroad      .      .      .  478 

33— Draft  Against   New  York   Banker's   Credit     . 482 

34 — Letter  of  Hypothecation  Given  to  Bankers 486 

35 — Draft  Naming  Specific  Bank .      .  488 

36 — Instructions  Given  Banker  as  to  Handling  Drafts 490 

37— Draft  with  "Colonial"  and  "In  Case  of  Need"  Clauses     .      .      .492 

38— Draft  with    "Interest"    Clause .492 

39 — Draft  wath  Drawee's  "Acceptance" 500 

Forms  4,  5,  6,  7,  12,  13,  14,  15,  23,  24  and  31  have  been  made  to  apply  to 
one  and  the  same  imaginary  transaction,  forming  a  complete  set  of  the 
papers  usually  involved  in  making  an  export  shipment  by  manufacturer 
direct  to  foreign  customer. 


PREFACE  TO  THE  SEVENTH  EDITION 

Since  the  publication  of  the  first  edition  of  this  book  the 
export  trade  of  the  United  States  has  undergone  many  and 
notable  changes,  both  in  conditions  and  in  practices.  The  tre- 
mendous, the  unprecedented,  demands  upon  American  manufac- 
turers and  exporters  arising  out  of  the  war  created  an  export 
trade  in  American  goods  never  before  dreamed  of  and  never 
approximated  by  any  other  nation  of  the  world.  The  Armis- 
tice of  1918  was  succeeded  by  an  era  of  expansion  and  of  highly 
speculative  activity  which  continued  and  even  increased  the 
wartime  export  trade  of  this  country.  A  collapse  inevitably 
followed.  Restricted  bank  credits,  depreciated  and  unstable 
exchanges,  falling  price  levels,  contributed  to  produce  something 
like  a  temporary  crisis  in  international  trade  and  to  develop 
situations  calling  for  wise  and  diplomatic  treatment.  The  ad- 
vantages of  training,  of  keen  intelligence,  broad  knowledge,  wide 
sympathies,  were  never  before  so  emphatic. 

It  is  easy  at  any  given  time  to  forget  relative  values.  It  was 
easy  in  1921  to  complain  of  dull  export  trade  in  face  of  the  fact 
that  for  the  fiscal  year  ending  June  of  that  year,  the  United 
States  exported  merchandise  to  a  total  value  of  $6,519,365,734. 
It  was  easy  to  forget  that  before  the  outbreak  of  the  war,  in  1913 
and  in  1914,  what  we  then  boasted  of  as  the  largest  export  trade 
in  the  history  of  the  country  amounted  (fiscal  year  ending  June 
30,  1914)  to  $2,364,579,148  only.  A  comparison  of  our  export 
trade  of  1921  with  that  of  the  pre-war  trade  of  1914  is  certainly 
far  from  discouraging,  no  matter  what  allowances  be  made  for 
higher  prices  of  merchandise. 

Meanwhile  the  necessity  for  the  maintainance  and  the  further 
development  of  export  trade  is  now  more  nearly  vital  than  it  ever 
was  before.  No  matter  if,  in  the  case  of  the  United  States  as  of 
all  other  countries,  export  trade  constitutes  only  a  comparatively 


PREFACE 

small  fraction  of  the  total  commerce  of  the  nation,  still  that 
small  fraction  may  and  usually  does  mean  the  difference  between 
profit  and  loss.  Inviting  opportunities  for  trade  expansion  still 
beckon  to  us.  Innumerable  kinds  of  American  manufactured 
goods  have  been  introduced  to  buyers  in  other  markets  of  the 
world.  If  we  do  not  keep  a  goodly  share  of  this  trade,  we  shall 
have  no  one  to  blame  but  ourselves. 

It  is  difficult  to  discover  or  to  foresee  more  danger  in  the 
future  than  in  the  past  from  possible  competition  on  the  part  of 
European  manufacturers.  That  competition  has  always  existed ; 
American  exports  have  progressively  and  rapidly  increased  in 
spite  of  it.  We  need  no  more  fear  British  or  German  competitors 
than  in  1913-14. 

Our  foreign  banking  practices  and  organization  are  being 
greatly  improved,  as  are  American  shipping  and  marine  insur- 
ance facilities.  All  phases  of  our  export  trade  relations  re- 
quire new  and  more  serious  study  so  that  it  may  be  so  estab- 
lished and  developed  as  to  be  not  only  profitable  but  perma- 
nently profitable.  We  need  not  only  to  sell  our  goods  but  to 
make  sure  that  they  "stay  sold,"  that  our  customers  continue 
customers.  These  chapters  may  help  some  exporters  to  achieve 
that  result. 

While  this  volume  is  intended  as  a  complete  whole,  consecu- 
tively arranged  in  logical  progression  so  far  as  possible,  yet  the 
author  has  attempted  to  make  each  chapter  self-contained.  One 
object  in  thus  designing  the  book  has  been  the  hope  that  through 
this  arrangement,  with  the  further  guide  of  the  side  heads  and 
the  assistance  of  a  carefully  prepared  index,  to  which  attention 
is  especially  directed,  the  export  manager  or  his  assistant  will  be 
able  to  make  direct  references  to  special  problems. 

The  author  thinks  it  may  not  be  out  of  place  to  remark  that 
these  chapters  are  based  on  an  actual  experience  of  more  than 
twenty  years  in  practical  exporting,  rather  wide  travels  up  and 
down  and  around  the  world,  some  knowledge  of  the  experiences, 
trials  and  successes  of  several  hundred  manufacturers. 

Because  of  the  frequent  discussions  of  American  export  trade 
problems  in  the  past  few  years,  it  has  been  possible  to  substan- 
tiate tlie  anther's  own  ideas  in  many  respects  by  liberal  quota- 
tions from  the  opinions  of  prominent  men  of  affairs. 

B.  0.  H. 


INTRODUCTION 

We  need  not  attempt  a  definition — we  know  export  trade  as  the 
business  which  lands  our  goods  in  the  show  windows  of  Paris  and 
Rio  de  Janeiro,  which  puts  them  in  the  bazars  of  Constantinople 
and  Bombay,  piles  them  up  in  the  warehouses  of  Melbourne  and 
London,  puts  them  at  work  in  the  wheat  fields  of  Russia  and  Ar- 
gentina and  in  the  factories  of  Germany,  makes  happier  life  in 
the  thatched  huts  of  Fiji,  adds  to  conveniences  and  luxuries  in 
the  palaces  of  Rome  and  Venice. 

Thirty  years  ago  as  a  very  young  man  journeying  in  Europe 
the  author  thrilled  with  pride  as  he  stood  before  a  showcase  in 
the  Brussels  Exposition  where  samples  of  American  goods  from 
his  father's  factory  were  on  display.  Many  times  in  the  years 
that  have  followed  has  he  experienced  greater  pride  and  satisfac- 
tion as  he  has  seen  American  goods  which  he  and  others  have  in- 
troduced in  shop  windows  of  the  world's  capitals  ranged  side  by 
side  with  the  best  products  of  older  countries,  has  gloried  in  being 
the  first  to  explore  some  new  markets,  has  actually  initiated  busi- 
ness in  goods  never  known  before  and  watched  the  growth  of 
those  new  American  interests  in  succeeding  years.  So  the  Ameri- 
can manufacturer  of  to-day  finds  not  only  profit  but  pride  as  he 
notes  the  marks  on  cases  which  his  shipping  department  is  dis- 
patching up  and  down  and  around  the  world,  as  he  follows  them 
across  the  seas  to  their  destinations  in  strange  and  distant  coun- 
tries and  learns  that  American  ingenuity  and  manufacturing 
methods  enable  us  to  compete  with  the  older  countries  of  Europe. 
So,  too,  the  youth  of  to-day,  deciding  upon  his  life's  work,  is  cer- 
tain more  and  more  to  be  attracted  by  the  possibilities  and  the  al- 
lurements of  business  with  foreign  countries. 

Trade  with  foreign  countries  beckons  to  us.  No  other  business 
is  so  broadening,  no  other  aspect  of  affairs  so  draws  out  manufac- 
turer or  merchant  from  the  uninspiring  humdrum  rut  into 
which  he  is  all  too  apt  to  fall.  In  doing  business  with  England, 
with  China,  with  Cuba,  he  is  brought  face  to  face  with  new  con- 

1 


2  PRACTICAL  EXPORTING 

ditions  and  new  problems.  lie  learns  a  good  deal  about  the  na- 
tions of  the  earth,  their  peoples,  their  commerce,  their  ways  of 
doing  business,  which  are  seldom  our  ways.  He  has  new  lessons 
in  geography  and  in  languages.  He  learns  something  about  new 
aspects  of  business  to  which  his  domestic  trade  will  never  intro- 
duce him,  about  ocean  shipping,  about  marine  insurance,  about 
international  banking  and  exchange.  The  successful  exporter 
will  become,  must  become,  a  broad-gauge  business  man  in  the 
highest  sense  of  the  term.  The  man  of  small  or  petty  ideas  can- 
not be  successful  long  or  continuously  in  doing  business  with  the 
biggest  and  best  merchants  of  other  countries  in  competition  with 
the  ablest  manufacturers  and  producers  of  the  world. 

A  single  order  is  useless  for  any  purpose.  Export  trade  to  be 
profitable  must  be  permanent  and  growing  year  by  year,  initial 
orders  of  to-day  must  and  will  be  followed,  if  they  are  handled 
wisely  and  intelligently,  by  larger  and  repeated  orders  for  ten, 
fifteen,  twenty  years  to  come.  The  fact  that  a  customer  is  lo- 
cated 10,000  miles  across  the  sea  by  no  means  implies  that  busi- 
ness with  him  is  hard  or  impossible.  It  actually  costs  less  to  ship 
goods  by  ocean  steamer  to  him,  10,000  miles  distant,  than  it  costs 
the  manufacturer  to  send  the  same  goods  to  a  customer  in  this 
country  only  1,000  miles  away. 

A  manufacturer's  feeling  on  being  first  approached  by  a  for- 
eign buyer  is  almost  always  one  of  pride  and  pleasure.  Origi- 
nally, probably  three  quarters  if  not  more  of  our  American  ex- 
port trade  came  to  us ;  in  the  first  instance,  we  did  not  go  out  to 
seek  it.  Scores  and  hundreds  of  our  manufacturers  cannot  to- 
day say  how  this  or  that  foreign  customer  ever  happened  to  hear 
of  them.  Yet  the  sale  of  American  goods  does  not  properly  begin 
abroad.  It  begins  at  home.  It  is  this  aspect  which  must  now 
claim  the  thought  and  maturest  consideration  of  our  manufac 
turers.  We  have  now  to  make  due  preparations,  to  determine 
upon  our  policies,  to  organize  our  efforts,  to  establish  in  our  own 
factories  and  offices  the  systems  that  will  result  in  success. 

Vogue  of  Imported  Goods. — In  the  windows  of  some  New 
York  candy  shops  is  displayed  the  sign,  "Imported  European 
Gum  Drops. ' '  But  gum  drops  is  one  of  those  varieties  of  Ameri- 
can confectionery  that  are  most  freely  exported— carload  ship- 
ments go  to  Europe  with  some  frequency.    Australian  wines  are 


INTRODUCTION  3 

listed  by  some  hotels  and  restaurants  in  London,  while  Cali- 
fornian  wines  are  by  no  means  unknown  in  Sj^dney  and  Mel- 
bourne. We  used  to  consume  a  good  deal  of  imported  German 
lager  beer  in  the  United  States.  At  the  same  time  shipments  of 
American  lager  beer  to  foreign  countries  were  valued  at  about  one 
million  dollars  a  year.  Jams  and  crackers  made  in  England  are 
sold  in  New  York  shops.  American  manufacturers  of  similar 
goods  enjoy  a  large  foreign  demand  for  their  products.  We 
sometimes  wear  English  hats.  In  London  we  find  no  difficulty  in 
buying  American  hats.  Sticks  of  English  shaving  soap  are  sold 
in  our  drug  stores,  sticks  of  several  kinds  of  American  soap  are 
sold  in  Loudon. 

There  is  a  certain  glamour  that  diffuses  itself  about  the  adjec- 
tive "imported"  in  other  countries  as  well  as  in  the  United 
States.  A  manufacturer  who  is  annoyed  by  a  preference  some- 
times shown  "imported  goods"  over  his  own  right  here  in  the 
United  States,  in  his  home  markets,  may  console  himself  with 
that  reflection.  Customers  will  not  be  found  wanting  in  other 
lands  who  will  there  give  preference  to  his  American  goods  for 
the  selfsame  if  for  no  other  reason — because  "imported."  This 
is  one  of  the  foibles  of  human  nature  the  world  over,  and  im- 
portant enough  actually  to  influence  the  movement  of  trade  to  a 
perceptible  degree.  All  in  all,  what  good  and  sufficient  reason 
is  there  that  should  deter  any  manufacturer  from  attempting 
foreign  business?     Why  not? 

The  world  was  once  fairly  familiar  with  half  frightened,  half 
contemptuous,  wholly  envious  reports  of  Germany's  systematic 
and  scientific  organization  and  pursuit  of  her  export  business.. 
We  know  something,  too,  of  the  highly  developed  state  of  some 
British  export  trade — a  trade  not  of  yesterday  nor  of  last  week, 
but  strong  in  a  century's  growth.  We  have  heard  of  the  big  and 
rich  foreign  trade  that  little  Belgium  had  quietly  but  steadily 
been  accumulating.  But  it  comes  as  a  surprise  to  some  of  us  to 
learn  that  Spain  has  shipped  steel  rails  across  the  Atlantic,  and 
that  Italy's  railway  rolling  stock  was  once  in  part  built  by 
Russian  shops. 

Immensity  of  the  World  Market.— It  is  not  altogether  a  bat- 
tle for  commercial  supremacy  that  is  so  sure  to  engage  the  manu- 
facturing nations  of  the  earth ;  rather  is  it  a  battle  for  commercial 


4  PRACTICAL  EXPOBTING 

existence.  It  is  too  often  the  custom  in  this  country  either  to 
speak  of  export  trade  for  American  goods  as  something  merely  in- 
cidental, or  to  rub  our  hands  in  smug  satisfaction  over  the  enor- 
mous volume  and  astounding  growth  of  our  foreign  shipments. 
Nine  out  of  every  ten  American  manufacturers  have  but  a  very 
hazy  idea  of  what  the  country  as  a  whole  is  doing  in  export  trade ; 
even  of  the  harvest  their  own  competitors  are  gathering  in  the 
way  of  foreign  orders.  Those  manufacturers  who  do  know  the 
facts  in  these  matters  often  overlook  the  immensity  of  markets 
that  may  be,  that  ought  to  be,  open  to  us.  Our  shoe  manufac- 
turers have  contemplated  with  some  satisfaction  exports  of  Amer- 
ican boots  and  shoes  to  South  Africa  amounting,  in  1914,  to  about 
two  hundred  thousand  dollars  per  annum.  They  overlook  the 
fact,  if,  indeed,  they  have  taken  interest  enough  in  the  subject 
to  investigate  it,  that  England  was  shipping  four  million  dollars' 
worth  a  year  to  that  same  South  African  market — twenty  times 
as  much  as  did  we. 

We  have  shipped  machinery  to  little  Belgium,  before  the  war, 
to  the  value  of  over  $1,200,000  a  year.  But  Belgium  in  the  same 
year  bought  machinery  worth  over  $3,000,000  from  England  in 
addition  to  almost  $4,000,000  worth  from  France.  In  scores  of 
other  lines  of  industry  and  in  dozens  of  other  foreign  markets 
American  manufacturers  have  barely  begun  to  nibble  at  tempting 
trade  that  we  ought  to  dominate.  Dominate  the  world's  mar- 
kets in  many  lines  of  manufactured  goods  we  can,  if  we  try.  We 
have  not  seriously  tried  as  yet.  An  absolutely  insignificant  per- 
centage only  of  American  manufacturers  have  so  much  as  lifted 
a  little  finger  to  get  or  to  develop  a  foreign  market  for  their 
goods. 

This  remains  essentially  true  despite  the  enthusiasm  with  which 
enormous  war  orders  have  been  accepted  by  hundreds  of  Ameri- 
can manufacturers.  Most  of  these  orders  also  have  come  to  us 
without  solicitation.  Where  efforts  have  been  made  to  secure 
such  business  they  have  usually  been  restricted  to  efforts  with 
commissions  of  various  foreign  countries,  visiting  the  United 
States  for  the  purpose  of  making  purchasers,  or,  if  they  have  ex- 
tended abroad,  they  have  been  sporadic  and  tempted  by  the  ex- 
traordinary conditions  existing,  not  least  among  which  have 
been  the  undoubted  creditability  and  the  cash  terms  involved. 


INTRODUCTION  5 

It  rarely  happens  even  here  at  home  that  orders  besiege  the 
manufacturer  unsought.  Few  factories  in  the  United  States  or 
elsewhere  are  kept  at  work  except  on  orders  strenuously  and 
eagerly  sought  and  urged  by  their  proprietors  through  liberal 
advertising  and  a  force  of  competent  salesmen. 

Foreign  business  also  must  be  sought.  In  no  other  way,  it 
should  be  remarked,  will  a  similar  amount  of  energy  and  intelli- 
gence pay  better  than  in  its  devotion  to  the  development  on  per- 
manent and  profitable  lines  of  export  relations. 

American  goods  are  still  very  new  in  many  foreign  markets. 
Even  in  countries  where  some  products  of  American  factories  are 
well  known,  others  are  strange  and  even  unheard  of.  When  a 
foreign  merchant  buys  a  new  article  from  the  United  States  it 
is  not  as  John  Smith  &  Go's  manufacture  that  he  knows  it, 
thinks  of  it,  or  calls  it.  It  is  the  new  *' American"  this  or  that. 
Woe  then  to  the  American  name  if  the  goods  are  not  like  sample, 
or  equal  to  advertised  description,  or  disappointing  in  any  way ! 
It  is  not  John  Smith  that  is  cursed — it  is  "those  rotten  American 
goods."  John  Smith  &  Co.  is  an  incident,  a  negligible  factor  in 
the  transaction.  John  Smith  &  Co.'s  goods,  in  the  eyes  of  the 
foreign  merchant,  are  simply  American  goods — purely  typical,  as 
the  case  may  be,  of  good  or  bad  products  to  be  qualified  by  that 
adjective.  How  true  this  is  will  be  acknowledged  by  any  manu- 
facturer of  considerable  personal  experience  in  foreign  markets. 
His  conceit  may  have  been  severely  jolted  in  arriving  at  a  recog- 
nition of  the  fact,  just  as  another  manufacturer's  national  pride 
will  certainly  rebel  against  the  injustice  of  arguing  from  insuf- 
ficient premises  against  the  worth  of  any  similar  American 
goods. 

These  reflections  carry  with  them  several  lessons  which  it  may 
be  worth  the  while  of  exporting  manufacturers  to  take  to  heart. 
It  is  highly  desirable,  for  example,  that  manufacturers  attempt 
to  learn  as  much  as  possible  regarding  the  principal,  even  the 
petty,  characteristics  of  foreign  markets  and  their  especial  re- 
quirements, and  endeavor  to  cater  to  these  prejudices  and  de- 
mands. An  American  consul  writes:  "The  American  business 
man  thinks  that  half  the  world  outside  the  United  States  is 
populated  by  *  Dutchmen'  and  the  other  half  by  'dagoes.'  " 
Customers  in  other  lands  do  not  walk  on  four  legs. 


6  PRACTICAL  EXPORTING 

THE  GROWTH  OF  OUR  AMERICAN  EXPORT  TRADE 

According  to  Col.  0.  P.  Austin,  formerly  Chief  of  the  Bureau 
of  Statistics  of  the  Department  of  Commerce,  in  a  consideration 
of  the  trade  of  the  world  as  it  existed  prior  to  the  outbreak  of 
war,  "only  one  hundred  years  ago,  in  the  year  1813,  after  men 
had  been  engaged  in  international  trade  for  4,000  years,  and  had 
utilized  the  compass  for  more  than  300  years,  the  value  of  the 
international  commerce  of  the  whole  world  was  less  than  that 
of  the  Port  of  New  York  to-day.  The  international  trade  of  the 
world  in  1813  was  $1,500,000,000 ;  the  foreign  trade  of  the  Port 
of  New  York  in  1913  was  practically  $2,000,000,000  (or,  to  be 
exact,  $1,986,000,000),  and  of  the  entire  world  $40,000,000,000." 
Prior  to  1870  the  United  States  had  almost  always  imported 
more  than  they  exported.  Since  1874  there  is  an  almost  un- 
broken record  of  an  excess  of  exports  over  imports,  the  total 
excess  from  1870  to  1912  being  over  $9,000,000,000.  From  1790 
to  1870  our  exports  averaged  $122,000,000  a  year;  from  1870  to 
1912  over  $1,000,000,000,  in  1913  and  1914  over  $2,400,000,000 
per  year.  In  the  forty  years  prior  to  1914,  while  our  population 
increased  150  per  cent.,  our  exports  increased  from  $9.77  to 
$24.66  per  capita. 

Our  Exports  of  Manufactured  Goods. — The  change  in  the 
character  of  our  exports  was  even  more  marked.  And  here,  as 
always  in  considering  statistics,  we  can  pay  no  attention  to  the 
enormous  but  abnormal  figures  for  our  trade  during  the  war 
years.  Manufactured  goods,  exclusive  of  foodstuffs,  in  1880 
constituted  only  14.78  per  cent,  of  our  total  exports  but  in  1913 
amounted  to  48.8  per  cent.  Crude  foodstuffs,  which  in  1880 
accounted  for  32  per  cent,  of  our  exports,  diminished  gradually 
until  in  1912  they  were  but  4.6  per  cent,  of  the  total.  Foodstuffs 
partly  or  wholly  manufactured  fell  from  an  average  of  25  per 
cent,  to  13.23  per  cent,  in  1913.  Crude  materials  make  about  30 
per  cent,  of  our  total  figures,  but  the  development  of  the  export 
trade  in  manufactured  goods  is  that  which  is  the  striking  figure 
in  our  statistics.  While  exports  of  all  other  American  merchan- 
dise increased  only.  39  per  cent,  from  1900  to  1913,  the  export 
of  our  manufactured  goods  grew  126  per  cent.,  a  far  greater  and 


INTRODUCTION  7. 

more  notable  percentage  of  increase  than  is  to  be  found  in  the 
figures  of  the  United  King'dom,  Germany  or  any  other  manufac- 
turing country,  while  the  actual  value  of  the  total  manufactures 
of  the  United  States  is  almost  double  that  of  the  United  King- 
dom and  was  about  equal,  in  normal  times,  to  those  of  Germany, 
France  and  Russia  combined. 

There  is  but  one  lesson  to  be  drawn  from  these  figures.  The 
United  States  will  remain  not  only  the  world's  greatest  pro- 
ducer and  manufacturer,  but  our  foreign  commerce  is  unques- 
tionably bound  to  continue  its  expansion.  If  any  proof  be 
need-ed  of  our  ability  to  compete  in  the  markets  of  the  world,  it 
is  to  be  found  in  the  fact  that  despite  competition  on  the  ground, 
our  exports  of  manufactured  goods  to  Europe  alone,  competing 
in  manufacturing  countries  with  their  own  products  and  those 
of  the  whole  world,  were,  in  1914,  more  than  our  exports  of 
such  goods  to  the  entire  world  in  1899. 

This  lesson  is  amplified  by  the  doubling  and  trebling  of  our 
exports  during  the  course  of  the  war,  speaking  now  of  exports  to 
neutral  countries  of  the  world  and  not  of  exports  of  munitions 
or  war  supplies.  We  have  had  the  opportunity  of  introducing 
many  new  goods  into  old  markets  and  of  enormously  developing 
trade  with  comparatively  new  markets.  American  manufactured 
goods  which  were  previously  unknown  in  practically  every  one 
of  our  foreign  markets  are  now  in  use  and  demand,  owing  to  the 
impossibility  of  securing  goods  from  Teutonic  sources  of  supply 
and  the  restricted  supplies  which  only  could  be  obtained  from 
other  European  manufacturing  countries.  The  usual  "sample 
orders"  for  new  goods  have  been  magnified  into  real  business 
of  extraordinary  dimensions.  Undoubtedly  many  of  these  new 
American  articles  will  have  made  names  and  places  for  them- 
selves and  trade  in  them  will  continue  in  years  to  come,  even  after 
the  restoration  of  European  manufacturing  industries.  What 
will  happen  in  the  case  of  others  of  our  goods  which  have  thus, 
virtually  in  spite  of  ourselves,  been  introduced  into  neutral 
markets  no  one  can  predict ;  but  this  may  be  asserted  without  fear 
of  contradiction — our  prospects  for  a  continuance  of  trade  will 
chiefly  depend  upon  the  satisfactory  or  unsatisfactory  fashion 
in  which  the  individual  manufacturers  have  handled  the  new 


8  PRACTICAL  EXPORTING 

trade  and  their  new  customers,  and  upon  the  earnestness  and  in- 
telligence shown  in  their  individual  efforts  to  maintain  and  culti- 
vate the  prestige  they  have  gained. 

Certain  it  is  that  factory  capacities  will,  now  and  in  tho 
future,  cry  for  "more  business,"  capacities  vastly  enlarged, 
many  of  them,  to  meet  the  demands  of  warring  nations  and  our 
own,  for  old  products  and  new.  Foreign  commercial  demands 
will  fill  those  factories  again,  if  stimulated  and  wisely  cultivated. 
A  continuing  favorable  balance  of  trade,  our  surplus  of  exports 
over  imports,  will  redound  to  the  prosperity  of  the  nation,  will 
help  pay  war  taxes,  in  increasing  the  output  of  factories  will 
reduce  the  overhead  percentage  and  thus  help  in  meeting  in- 
creased wage  demands  of  labor.  Foresight,  study,  enterprise, 
are  demanded  as  never  before.  Our  tremendous  war  exports, 
1914-1920,  with  consequent  favorable  balances  of  trade,  so  called, 
probably  cannot,  indeed  should  not,  continue  in  similar  propor- 
tion.' No  thinking  man  anticipates  or  hopes  for  that  result. 
Yet  certain  it  is  that  the  export  trade  of  the  United  States  will 
for  years  to  come,  doubtless  permanently,  exceed  anything  we 
dreamed  of  before  the  war,  and  in  imposing  -volume,  if  we 
handle  our  new  business  wisely. 


PRACTICAL  EXPORTING 


CHAPTER  I 

WAYS  AND  MEANS 

The  Many  Facilities  for  Export  Trade  Available  to  American 
Manufacturers — What  Studies  and  Methods  Are  Advantageous 
— The  Basic  Rules  in  Exporting — How  to  Learn  if  One's 
Goods  Can  Be  Sold  in  Other  Countries — High  Priced  Goods 
even  more  Suitable  for  Export  than  Cheap  Goods. 

TO  the  man  who  knows  nothing  about  it,  to  break  into  the 
export  trade  might  seem  a  difficult  and  perhaps  an  ex- 
pensive operation.  It  is  neither.^  There  does  not  exist  a 
single  great  exporter  of  to-day,  even  among  the  biggest  firms  and 
corporations  which  rank  among  our  largest  individual  exporters, 
who  began  campaigning  for  business  in  foreign  markets  on  an 
expensive  basis.  One  and  all,  as  shrewd  business  men,  planning 
their  foreign  relations  as  they  conduct  their  domestic  affairs  on 
a  sound  and  reasonable  basis,  first  looked  carefully  into  possi- 
bilities, angled  cautiously  and  wisely  for  trial  orders,  built  up 
the  succeeding  business  gradually  until  the  point  was  reached 
when  no  business  concern  calling  itself  progressive  could  avoid 
the  positive  necessity  that  had  developed — the  necessity  to  spend 
a  part  of  the  new  profits  in  building  more  ambitiously  than 
before  on  the  advantage  of  the  trade  that  had  been  started  and 
the  prospects  it  so  invitingly  held  out. 

THE  MACHINERY  OF  EXPORT  TRADING 

In  succeeding  chapters  there  will  be  discussed  the  several 
means  of  starting  as  well  as  developing  trade  in  other  countries. 

1  "There  is  no  essential  difference  between  increasing  business  in  St. 
Louis  and  increasing  it  in  Rio  or  Buenos  Aires,  and  there  will  be  no 
more  difficulty  in  doing  so  if  the  same  care  and  efforts  are  devoted  to  it" 
(Alba  B.  Johnson,  writing  when  President    Baldwin  Locomotive  Works.) 

9 


10  PRACTICAL  EXPORTING 

They  may  here  be  summarized  as  (1)  correspondence,  (2) 
traveling  salesmen,  (3)  advertising,  (4)  export  commission 
houses.  For  the  conduct  of  his  export  trade  the  manufacturer 
has  at  his  disposal :  agents  permanently  resident  in  foreign 
markets,  American  export  agents  and  foreign  freight  forwarders. 

Selling  Through  Traveling  Men. — We  are  constantly  hearing 
a  great  deal  about  the  necessity  for  American  manufacturers 
to  send  out  their  own  traveling  men  to  foreign  markets,  that 
otherwise  it  is  impossible  to  get  any  business  from  them.  No 
one  yet  has  instanced  an  example  in  proof  of  the  statement. 
No  such  instance  can  be  pointed  to,  for  it  does  not  exist.  Foreign 
travelers  are  sent  out  by  any  concern  only  after  it  has  been  defi- 
nitely proven  that  sufficiently  remunerative  markets  exist  to 
justify  such  a  course.  Certainly  the  cultivation  of  possible  trade 
by  such  means  is  the  ideal  way.  Any  manufacturer,  even  the 
smallest,  may  contemplate  such  a  course,  may  look  forward  to 
it  and  plan  for  it — but  he  will  not  inaugurate  it  until  he  has 
become  thoroughly  convinced  from  actual  results  obtained  in 
other  and  simpler  fashion  that  the  experiment  may  be,  ought  to 
be,  profitable.  Moreover,  there  does  not  exist  a  manufacturer 
or  exporter,  whether  in  the  United  States  or  in  the  great  in- 
dustrial countries  of  Europe,  who  sends  traveling  men  into  every 
market  where  he  does  business.  The  maker  of  a  certain  article 
may  deem  it  wise  to  send  a  traveling  man  to  England  while  he 
will  think  it  absurd  to  contemplate  sending  one  to  China.  An- 
other manufacturer  may  send  a  traveling  man  to  Brazil  and 
Argentina,  but  he  will  not  think  it  worth  while  spending  money 
in  sending  that  man,  or  any  man,  to  Ecuador  and  Bolivia.  A 
multi-millionaire  corporation  will  exercise  precisely  the  same 
discretion  in  this  respect  as  does  the  manufacturer  capitalized 
at  $10,000.  The  latter  may  send  a  traveling  man  to  California 
or  to  England.  His  course  in  either  case  will  be  dictated  by 
what  he  believes  from  experience  and  from  investigation  will 
prove  profitable.  A  traveling  man 's  expenses  in  the  last  instance 
are  no  greater  than  in  the  other. 

Selling  by  Correspondence. — Working  up  an  export  trade 
through  correspondence  is  necessary  no  matter  what  other  means, 
traveling  salesmen  or  other,  are  adopted.  And  it  is  a  feature 
of  export  business  which  is  of  peculiar  educational  value  in  the 


WAYS  AND  MEANS  11 

conduct  of  a  manufacturer's  domestic  business  as  well.  To  learn 
how  to  handle  distant  customers  whom  he  cannot  possibly  visit 
in  person,  how  to  provoke  inquiries  and  how  to  turn  inquiries 
into  orders  through  the  mails  is  something  which  it  is  well  worth 
while  learning.  This,  be  it  noted,  is  a  radically  different  proposi- 
tion from  our  all  too  familiar  mail  order  and  peddling  agent 
work  with  consumers  here  at  home.  To  get  business,  to  keep 
business,  to  increase  business,  all  purely  through  correspondence, 
with  big,  rich  merchants,  the  most  desirable  possible  customers 
in  great  foreign  markets,  present  quite  another  form  of  effort, 
call  for  the  exercise  of  the  highest  intelligence  and  ability.  To 
assert  that  it  is  impossible  to  get  any  export  business  through 
correspondence  alone  is  supremely  ridiculous  in  the  face  of  the 
experience  of  thousands  of  American  exporters.  There  is  not 
an  exporter  in  the  country  who  does  not  carry  on  his  records 
some  customers  whom  he  has  never  seen,  whose  business  he  se- 
cured and  whose  patronage  he  retains  solely  by  means  of  cor- 
respondence. Many  there  are  who  have  never  done  any  export 
business  whatsoever  with  anybody  in  any  other  fashion. 

Advertising  to  Get  Foreign  Trade. — Similarly,  in  advertising 
for  foreign  trade  thought  ought  to  be  given  to  the  habits,  per- 
sonality and  intellectuality  of  peoples  of  other  countries,  their 
languages,  their  ways  of  doing  business.  Such  a  study  also  is 
educational  in  the  highest  degree,  and,  like  every  other  aspect 
of  the  export  trade,  tends  to  broaden  the  man  who  undertakes  it 
and  fit  him  the  better  for  the  development  and  the  conduct  of  his 
home  trade. 

Export  Commission  Houses. — Doing  export  business  through 
what  we  commonly  call  export  commission  houses,  which  are 
established  in  New  York  and  at  various  ports  of  the  United 
States,  might  be  thought  to  offer  the  royal  road  to  success. 
These  houses  do  indeed  offer  valuable  help  to  manufacturers  who 
wish  to  increase  their  foreign  trade  and  no  one  should  disregard 
their  facilities.  On  the  other  hand,  no  manufacturer  should  de- 
pend exclusively  on  them.  Few  of  them  in  the  United  States  are 
merchants  properly  so-called,  buying  and  selling  goods  for  their 
own  account.  If  some  of  them  do  operate  in  some  of  our  foreign 
markets  as  merchants,  stocking  or  "jobbing"  goods,  it  will  be 
found  that  such  activities  are  restricted  to  a  few  special  lines 


12  PRACTICAL  EXPORTING 

only,  and  it  must  never  be  forgotten  that  tliere  is  no  such  house 
in  existence  which  does  business  in  all  of  the  world's  markets 
and  that  the  business  done  by  any  such  house  varies  radically 
according  to  the  market  where  it  is  active,  selling  one  kind  of 
goods  in  one  market  while  in  another  an  entirely  different  sort  of 
business  is  carried  on.  There  are  buying  agencies  in  the  United 
States  for  merchants  established  in  some  foreign  countries. 
Each  such  house  is  to  be  regarded  as  a  jobber  in  the  market 
where  he  is  established.  They  are  not  to  be  regarded  as 
"agents"  for  carrying  on  a  propaganda  in  behalf  of  any  special 
one  of  the  lines  which  they  handle.  The  great  majority  of  ex- 
port houses,  however,  belong  in  the  classification  of  export  com- 
mission houses.  As  such  they  are  buying  agents  in  this  country 
for  independent  merchants  of  other  lands,  rather  than  selling 
agents  for  American  manufacturers  in  foreign  markets.  This 
will  be  explained  in  greater  detail  in  the  chapter  devoted  to  this 
means  of  carrying  on  an  export  trade. 

Resident  Foreign  Agents. — In  every  foreign  market  where 
American  goods  can  be  sold  there  are  domiciled  scores  if  not 
hundreds  of  commission  agents  who  depend  for  their  bread  and 
butter  on  their  success  in  selling  the  products  of  oversea  fac- 
tories. European  manufacturers  are  almost  a  unit  in  utilizing 
their  services  to  introduce  new  wares  and  keep  alive  and  pro- 
mote, as  well  as  safeguard,  trade  already  established.  These 
agents  are  salesmen,  not  buyers  of  goods.  The  professional 
export  houses  of  the  United  States  have  long  made  free  use  of 
them.  It  is  only  in  comparatively  recent  years  that  American 
manufacturers  have  begun  to  realize  how  they  may  safely  and 
advantageously  be  employed.  Perhaps  it  is  not  too  much  to  say 
that  one  of  the  surest  ways  of  developing  this  country's  great 
export  opportunities  lies  in  the  more  general  recognition  and 
employment  of  the  facilities  offered  by  the  best  class  of  these 
foreign  commission  agents.  Care  and  discretion  without  limit 
must  be  exercised  in  the  selection  of  such  an  agent,  but  finding 
the  right  one  in  each  market  is  ({uite  sure  to  be  worth  all  the 
time  and  effort  it  may  cost. 

American  Export  Agents. — The  manufacturer  who  does  not 
wish  to  create  an  Export  Department  of  his  own,  who  prefers  to 
be  relieved  wholly,  or  in  large  part,  of  the  details  of  developing 


WAYS  AND  MEANS  13 

and  carrying  on  a  business  with  other  countries,  may  entrust 
his  foreign  interests  to  one  of  hundreds  of  so-called  "manufac- 
turers' export  agents"  who  are  established  in  New  York  and 
some  other  American  cities  devoting  themselves  solely  to  foreign 
sales.  Each  such  agent  represents  a  number  of  different  manu- 
facturers, usually  in  non-competing  lines.  The  pro  rata  expense 
of  each  manufacturer  thus  represented  is,  therefore,  somewhat 
less  than  might  be  that  of  his  own  individual  effort.  The  scope 
of  the  activities  as  well  as  the  methods  employed  by  these 
"manufacturers'  export  agents"  vary  and  require  special  in- 
vestigation in  each  case.  Furthermore,  those  manufacturers 
who  employ  them  must  themselves  manifest  a  lively  interest  in 
their  own  export  trade,  its  promotion  and  its  conduct,  if  they 
seek  success.  In  no  aspect  of  his  foreign  business  relations  can 
a  manufacturer  relieve  himself  of  personal  interest  and  duty. 
Like  other  facilities  at  his  disposal  the  manufacturers'  export 
agents  will  be  considered  at  length  in  later  chapters. 

Foreign  •  Freight  Forwarders. — Finally  the  exporting  manu- 
facturer has  at  his  disposal  the  services  of  the  all-important  for- 
eign forwarding  agents.  He  may,  if  he  choose,  through  them  be 
relieved  of  almost  every  detail  connected  with  the  shipping  of 
his  export  goods.  They  will  despatch  to  any  part  of  the  world 
small  packages  or  car-load  lots.  They  will  take  care  of  every 
detail  at  port  of  shipment,  ocean  bills  of  lading,  custom  house 
formalities,  marine  insurance,  etc.  The  foreign  freight  for- 
warders, or  as  some  of  them  wrongly  call  themselves  "foreign 
expresses, ' '  are  not  agencies  for  the  introduction  or  sale  of  goods 
abroad — they  are  purely  shipping  agents.  As  such  they  may 
often  be  practically  indispensable  to  any  exporter.  Their  op^ 
erations  and  facilities  require  study.  How  they  may  be  utilized 
profitably  and  advantageously  will  form  the  subject  matter  of 
many  pages  in  this  volume. 

SCIENTIFIC   STUDY   AND   METHODS   OF  EXPORTING 

For  years  American  manufacturers  have  been  plagued  by  a 
never  ending  procession  of  critics  who  have  told  us  that  we  did 
nothing  right  and  that  we  were  by  no  means  the  equal  of,  nor 
indeed  qualified  to  compete  in  the  world's  great  markets  with 
manufacturers  of  Europe.     Strangely  enough,  our  export  trade, 


14  PRACTICAL  EXPORTING 

particularly  our  trade  in  manufactured  goods,  has  grown  at  the 
extraordinary  rate  already  mentioned,  had  grown  much  faster 
before  the  war  than  had  the  similar  trade  of  England,  Germany 
or  France.  Curiously  enough,  too,  very  similar  criticisms  were 
made  by  British  and  by  German  consuls,  newspapers  and  lec- 
turers, of  the  practice  of  British  and  German  manufacturers. 
A  German  text  book  used  in  the  commercial  high  schools  of  Ger- 
many berates  manufacturers  and  holds  up  American  practices  to 
their  emulation.  A  British  trade  paper  waxes  indignant  over 
the  fashion  in  which  English  hardware  manufacturers  send  out 
their  goods  and  declares  that  "The  American  manufacturers 
were  the  first  to  show  Australian  dealers  what  can  be  done  in  the 
way  of  putting  up  goods.  They  still  lead  in  this  particular. 
There  are  some  British  manufacturers  to  whom  'modernism' 
(in  the  business  sense)  makes  no  appeal.  Either  they  regard  it 
as  a  heresy,  or,  what  is  more  likely,  they  have  little  or  no  ac- 
quaintance with  the  thing.  Their  attitude  or  ignorance,  which- 
ever it  be,  is  regrettable.  It  is  costing  them  business.  The 
methods  of  their  fathers  may  serve  on  the  spot.  We  do  not 
know.     In  Australia  they  certainly  will  not  serve." 

Mistakes  of  American  Manufacturers. — First,  among  hin- 
drances to  the  successful  building  up  of  export  trade  are,  in  the 
language  of  a  recent  writer:  "Impatience  for  quick  returns, 
ignorance  of  conditions  in  the  foreign  field,  and  the  lack  of  sus- 
tained effort."  These  fundamental  blunders  were  put  in  con- 
crete form  not  long  ago  by  a  large  foreign  merchant,  who  re- 
marked :  **We  would  like  very  much  to  do  business  with  Ameri- 
can manufacturers  for  a  good  many  reasons,  but  whenever  we 
have  begun  to  do  business  with  them  we  have  immediately  seen 
that  we  had  made  a  mistake.  They  are  not  the  makers  for  us. 
They  do  not  treat  us  right — they  do  not  cooperate  with  us  and 
the  worst  of  all  is  that  they  seem  to  think  they  are  doing  us  a 
great  favor  in  supplying  us  with  their  goods." 

It  seems  frequently  to  be  the  case  that  the  manufacturer  is  un- 
duly anxious  merely  to  get  an  order.  Strange  as  such  a 'Criti- 
cism may  seem,  it  is  none  the  less  well  founded.  Obtaining  an 
order  is  but  the  first  step,  and  sometimes  the  easiest  step,  toward 
the  upbuilding  of  an  export  business.  Upon  the  satisfactory 
execution  of  the  order  may  depend   every  future   possibility. 


WAYS  AND  MEANS  15 

Upon  the  selection  of  customers  and  the  arrangements  made  for 
the  thorough  cultivation  of  a  territory  and  the  supply  of  its  re- 
quirements may  hinge  the  profit,  as  well  as  the  volume  of  busi- 
ness, to  be  obtained. 

In  writing  a  letter  to  the  American  Exporter,  commending 
certain  articles  which  it  had  recently  published,  a  prominent 
New  York  export  house  used  the  expression,  "American  manu- 
facturers seem  to  be  hypnotized  by  the  receipt  of  a  letter  bearing 
a  foreign  stamp, ' '  and  went  on  to  state  that  "it  is  no  uncommon 
thing  for  a  manufacturer  to  quote  his  absolutely  rock  bottom  ex- 
port prices  to  a  small  retail  dealer  in  a  foreign  city,  who  is  prob- 
ably not  even  our  customer,  but  the  customer  of  a  customer  of 
ours. ' ' 

Still  other  manufacturers  seem  to  be  anxious  for  nothing  so 
much  as  to  get  their  "cash  in  advance" — an  order  with  check 
enclosed  seems  to  commend  itself  to  them  as  the  desidera  desid- 
eratum of  commercial  transactions.  But  what  about  a  second 
order  from  the  same  customer?  The  check  is  very  satisfactory, 
indeed,  but  the  single  transaction,  unless  it  paves  the  way  to  a 
regular  business,  is  of  the  smallest  importance.  Many  foreign 
importers  speak  bitterly  on  this  subject.  Machinery,  automo- 
biles, new  makes  of  typewriters  are  ordered,  arrive  minus  essen- 
tial parts,  with  parts  broken,  or  break  down  in  service.  No 
extra  supplies  have  been  shipped,  no  nearby  depot  of  supplies 
established  for  the  prompt  replacement  of  necessary  parts.  The 
parts  must  be  ordered  from  the  United  States,  three  months,  six 
months  elapse  before  their  receipt;  meanwhile  the  machine  is 
idle  and  useless,  and  when  received  they  are  frequently  the 
wrong  parts.  The  importer  finds  business  with  the  United 
States  "too  difficult."  The  original  order  itself,  in  itself,  pleas- 
ing or  flattering  as  it  may  be  regarded,  is  of  only  minor  impor- 
tance. It  must  be  executed  in  such  a  manner  as  to  satisfy  the 
customer  thoroughly  and  encourage  future  business. 

To  discover  that  his  goods  can  be  sold  profitably  in  one  mar- 
ket ought  not  unduly  to  elate  a  manufacturer.  It  ought  merely 
to  serve  as  an  incentive  to  study  that  market  carefully  and  find 
how  to  get  the  greatest  possible  amount  of  business  from  it. 
The  discover}^  that  no  market  at  all  exists  for  the  same  manu- 
facturer's goods  in  another  country  ought  not  to  discourage  him. 


16  PRACTICAL  EXPORTING 

He  doubtless  finds  very  much  the  saine  state  of  affairs  existing 
right  here  in  the  United  States.  In  one  of  our  States  he  may 
have  a  large  trade,  in  another  State  or  perhaps  a  certain  district, 
owing  to  local  conditions,  he  may  find  it  possible  to  do  little  if 
any  business.  His  failure  to  find  a  market  in  one  direction  has 
no  bearing  whatsoever  upon  the  development  of  business  in  a 
more  promising  field. 

Customers'  Interests  Considered.— The  foreign  customer  must 
be  put  in  a  position  to  make  profits  on  his  American  goods. 
Breakages,  delays,  loss  of  time,  patience  and  money,  even  when 
in  no  way  chargeable  to  the  American  manufacturer,  constitute 
a  serious  handicap  to  the  expansion  of  his  business.  To  reduce 
to  a  minimum  the  annoyances  necessarily  undergone  by  any  im- 
porter of  foreign  goods  is  to  insure  future  patronage.  The  au- 
thor writes  with  feeling  on  this  subject.  It  was  too  often  forci- 
bly and  painfully  emphasized  in  the  course  of  many  years'  ex- 
perience in  doing  business  abroad. 

Serious  study  should  not  alone  be  given  the  subject  of  handling 
the  first  order,  far  more  important  is  the  question  of  laying  a 
broad  and  firm  foundation  for  the  development  of  foreign  busi- 
ness after  receipt  of  the  first  order.  Speaking  of  what  he  calls 
"order  intoxication,"  some  one  remarks:  "With  the  first  order 
a  manufacturer  often  loses  his  perspective  and  forms  it  into  a 
temporary  block  to  future  progress." 

Writing  from  a  Latin  American  country,  a  business  man  estab- 
lished there,  who  had  previously  spent  many  years  in  the  United 
States,  offers  the  following  comment:  "It  is  naturally  difficult 
to  induce  dealers  here  to  throw  over  a  line  they  have  been  han- 
dling for  years  in  order  to  take  up  a  new  and  untried  line.  Con- 
cessions and  inducements  of  every  sort  must  be  offered.  If  nec- 
essary for  the  American  manufacturer  to  find  other  agents  than 
the  established  houses  of  first  importance,  they  surely  cannot 
expect  any  man  of  ordinary  business  ability  to  undertake  to 
compete  with  old  established  and  powerful  houses  unless  he  is 
well  backed  in  every  way.  Even  if  an  active,  honest  and  re- 
sponsible agent  is  found  he  will  further  require  the  heartiest  co- 
operation of  the  manufacturer  himself,  a  feature  in  the  business 
of  equal  importance  with  the  energy  and  activity  of  the  agent. 
I  believe  it  is  true  that  many  American  manufacturers  are  will- 


WAYS  AND  MEANS  17 

ing  under  suitable  couditions  to  extend  favorable  terms  of 
credit,  but  something  more  is  needed;  that  is  a  personal  in- 
terest in  the  market  and  in  the  operations  of  the  agent  on  the 
part  of  the  manufacturer  and  the  heartiest  good  will  to  co- 
operate in  every  possible  manner  for  mutual  success." 

SOME  BASIC  RULES 

Very  likely,  iDcrhaps,  it  has  been  due  to  the  fact  that  export 
trade  is  exceptionally  profitable,  possibly  to  the  widespread  but 
utterly  mistaken  impression  that  that  trade  comes  to  us  without 
an  ett'ort,  that  a  good  many  manufacturers  seem  to  expect  in  it 
to  "get  something  for  nothing."  In  their  convers^ion,  in  fact 
in  their  correspondence,  one  hears :  ' '  We  'd  like  to  get  the 
orders,  but  we  don't  feel  that  we  should  pay  any  commission  or 
expenses,  or  run  any  risks. ' '  And  this  from  people  of  reputation 
as  shrewd  and  successful  business  men !  But  it  loses  business 
in  the  export  field.  To  reduce  expenses  to  the  minimum  is  un- 
deniably good  policy.  That  goes  without  saying.  But  neither 
in  work  for  foreign  orders  nor  in  the  execution  of  such  orders 
can  something  for  nothing  be  expected.  The  exporter  must  be 
fair-minded  if  not  liberal-minded ;  above  all  he  must  avoid  the 
very  appearance  of  anything  to  the  contrary. 

Moreover,  the  exporter  has  something  more  to  guard  than  his 
own  dignity,  reputation  and  success.  He  should  guard  the  in- 
terests of  his  country  in  the  same  respects.  The  exporter  who  is 
not  equally  as  jealous  of  the  American  name  and  reputation  as 
of  his  own  deserves  to  be  suppressed  by  law,  and  unfortunately 
there  have  been  times  when  honest  Americans  have  bitterly  la- 
mented the  absence  of  any  machinery  to  keep  over-sharp  speci- 
mens out  of  the  export  trade. 

The  general  rule  that  should  govern  our  business  relations 
with  other  countries  may  perhaps  be :  Put  yourself  in  the 
other  man's  place.  If  you  will  treat  your  foreign  customers  on 
this  basis,  striving  to  understand  their  situation  and  their  point 
of  view,  and  endeavoring  by  every  possible  means  consistent 
with  a  profitable  conduct  of  your  own  business  to  meet  their 
terms  and  wishes,  you  will  not  go  far  wrong,  cannot  very  well 
avoid  building  up  a  growing  and  successful  trade. 

Another  basic  rule  may  be :     Never  guess ;  be  exact  invariably, 


18  PRACTICAL  EXPORTING 

and  dignified,  even  formal  also.  Far  better  to  refuse  an  order, 
or  to  hold  it  for  instructions  when  each  and  every  item  and  con- 
dition is  not  clear  beyond  the  peradventure  of  a  doubt. 

Make  no  promises  which  you  will  not  be  willing  to  fulfil,  cost 
what  it  may.  Adhere  implicitly  to  offers  that  you  have  made, 
follow  without  deviation  every  promise  in  your  contract  as  well 
as  every  clause  in  conditions  accompanying  contracts  which  your 
customers  make  with  you. 

Meet  your  customers  frankly  and  openly,  stand  your  ground 
firmly  when  there  is  an  apparent  effort  to  impose  upon  you,  but 
give  your  clients  the  benefit  of  every  doubt.  Be  not  too  cock- 
sure that  you  and  your  clerks  are  invariably  right  and  the  only 
ones  who  can  be  right. 

TO  LEARN  ABOUT  EXPORT  CHANCES 

In  times  gone  b}^  a  large  share  of  our  export  orders  came  to 
us  unsolicited,  as  has  already  been  remarked.  We  owe  our  start 
in  foreign  markets,  in  some  instances,  to  foreigners  who  have 
merely  visited  this  country  and  have  been  impressed  by  what 
they  have  seen  and  heard ;  in  others,  to  foreign  mechanics  who 
have  spent  some  time  in  American  factories  and  afterwards  re- 
turned to  their  original  homes  carrying  with  them  lessons  of 
experience  in  American  practice  gained  during  their  stay  here, 
and  in  yet  others,  and  in  perhaps  even  more  numerous  instances, 
to  stories  of  American  progress  in  some  industrial  lines  told  by 
our  export  and  trade  journals.  For  these  and  other  reasons 
many  inquiries  formerly  came  to  our  factories  unsolicited ;  even 
to-day  many  a  manufacturer  reports  that  he  occasionally  re- 
ceives orders  from  foreigners  but  has  no  idea  how  they  ever 
heard' of  his  existence  or  of  the  goods  he  makes.  None  the  less, 
the  times  are  changed.  Inquiries  of  this  sort,  unprovoked  and 
unsolicited,  grow  and  must  grow  rarer  and  rarer.  In  any  event, 
such  chance  orders  aggregate  a  mere  bagatelle  and  cannot  be  con- 
sidered as  constituting  a  business.  Moreover,  with  the  increase 
in  the  application  of  the  principles  of  scientific  management 
and  general  efficiency  in  American  factories,  it  is  becoming  more 
and  more  impossible  for  intelligent  manufacturers  to  rest  con- 
tent with  such  sporadic  orders,  more  and  more  it  is  being  recog- 
nized that  one  foreign  order  is  only  a  clue  to  many  possible 


WAYS  A^'D  MEANS  19 

orders  in  the  same  city  or  iu  neighboring  cities,  in  the  same 
country  or  in  many  countries.  The  question  at  issue,  then,  is 
how  to  develop  to  its  limit  every  possible  market — first,  of 
course,  those  where  goods  have  in  one  way  or  another  already 
been  introduced  and  recognized.  The  manufacturer  who  gives 
any  thought  at  all  to  export  possibilities  for  his  line  is  likely 
first  of  all  to  ask  himself,  "Can  my  goods  be  sold  in  foreign 
countries?"  then,  "Where  can  they  be  sold?"  and  "How  to  sell 
them?" 

CAN  GOODS  BE  SOLD? 

To  the  first  inquiry  there  is  but  one  answer.  Yes.  Svery 
article  made  in  the  United  States  can  be  sold  in  some  foreign 
country.  There  is  not  an  American  factory  which  is  able  to  do 
a  considerable  business  here  at  home  in  general  competition  with 
other  factories,  which  cannot  also  find  outlets  for  its  products 
of  no  matter  what  nature,  somewhere  beyond  our  own  borders — 
if  nowhere  else,  in  nearby  countries  where  proximity,  the  saving 
of  time  in  transit,  ability  to  obtain  fresh  supplies  quickly  and 
similar  considerations  offset  advantages  which  otherwise  compet- 
ing manufacturing  nations  m^'ght  be  able  to  offer.  There  is  not 
one  of  our  peculiar  American  customs  which  have  gradually 
grown  up  in  the  United  States  and  have  entailed  the  manufac- 
ture of  peculiar  goods  which  has  not  already  spread,  to  some 
extent  at  least,  to  neighboring  countries  and  some  of  them  have 
already  penetrated  far  afield.  To  talk  of  selling  American  pic- 
kles in  Germany  seems  very  much  like  carrying  the  proverbial 
coals  to  Newcastle,  but  it  has  been  done  and  successful!}'.  Our 
essentially  national  and  quite  modern  prepared  breakfast  cereals 
have  actually  been  sold  around  the  world. 

Do  Competitors  Export? — One  of  the  extraordinary  features 
of  the  attitude  of  some  American  manufacturers  toward  foreign 
possibilities  is  not  merely  their  skepticism  as  to  possibilities  for 
their  own  goods,  but  their  extraordinary^  ignorance  of  the  fact 
that  their  immediate  competitors  in  this  country  are  already 
acutally  enjoying  some  of  that  export  trade  which  they  would 
like  to  have  but  hesitate  to  seek.  A  manufacturer  of  plows  is 
found,  for  example,  who  seems  not  to  know  that  other  American 
plow  manufacturers  with  whom  he  is  constantly  competing  here 


20  PRACTICAL  EXPORTING 

at  home  are  actually  doing  to-day,  as  some  of  them  have  for 
half  a  century  past,  a  large  and  profitable  foreign  trade.  This, 
it  may  be  granted,  is  an  extraordinary  illustration,  but  strange 
as  such  ignorance  in  this  particular  trade  may  seem,  it  is  none 
the  less  a  true  statement  of  fact.  It  is  an  illustration  of  a  wide- 
spread condition  which  may  be  especially  striking,  since  one 
might  suppose,  as  a  matter  of  course,  that  no  plow  manufacturer 
in  the  United  States  can  very  well  avoid  knowing  something  of 
the  past  and  the  existing  export  trade  in  American  plows. 

One  of  the  first  means  available  to  a  manufacturer  to  answer 
his  own  question,  "Can  my  goods  be  sold  for  export?"  may  be 
inquiry  of  his  own  competitors — guarded,  diplomatic  inquiry 
perhaps — yet  not  in  all  branches  of  industry  is  trade  jealousy 
so  acute  that  no  information,  or  misleading  information,  will  be 
given.  With  our  many  and  strong  trade  associations  it  would 
seem  that  immediate  information  is  "^available  to  any  manufac- 
turer in  reply  to  an  inquiry  as  to  whether  any  one  else  in  his 
particular  line  is  already  shipping  foreign  orders. 

Information  from  Suppliers. — Very  especially,  however,  any 
manufacturer  has  at  his  command  for  the  securing  of  this  same 
information,  the  friendship  and  the  acquaintance  of  his  sup- 
pliers, the  people  from  whom  he  buys  raw  materials  or  parts. 
The  manufacturers  of  boots  and  shoes  can  learn  something  from 
the  traveling  man  who  sells  him  and  his  competitors  upper 
leather,  or  sole  leather,  or  findings ;  the  making  of  carriages  and 
wagons  can  learn  something  of  the  foreign  trade  which  other 
makers  of  similar  vehicles  may  have  on  inquiry  from  his  friends 
who  sell  him  springs,  wheels  and  upholsterj^  materials. 

The  mere  fact,  which  can  readily  enough  be  ascertained,  that 
competitors  actually  ship  goods  to  foreign  markets,  will  or 
should,  as  a  matter  of  course,  lead  to  further  and  more  detailed 
inquiries. 

WHERE  CAN  GOODS  BE  SOLD? 

Information  obtained  by  the  manufacturer  from  his  suppliers, 
as  has  just  been  suggested,  may  be  more  or  less  detailed  as  to 
the  operations  in  foreign  fields  oi  the  competitors  of  the  manu- 
facturer as  his  acquaintance  with  the  supplier  may  be  more  or 
less  intimate.     It  will  very  likely  be  found  that  the  supplier 


WATS  AND  MEANS  21 

himself  is  carrying  on  an  export  trade  in  the  same  parts  or  ma- 
terials which  the  manufacturer  is  buying  here  at  home.  In  this 
case  the  supplier  can  tell  not  only  something  about  what  other 
manufacturers  of  the  completed  article  are  doing  abroad,  but 
he  may  also  be  able  to  give,  in  the  light  of  his  own  experience, 
valuable  hints  to  the  manufacturer  as  to  some  foreign  markets 
and  as  to  ways  of  conducting  an  export  trade.  Here  is  an  illus- 
tration of  one  phase  of  the  broad  mindedness  which  it  has  been 
remarked  must  characterize  the  exporter. 

Markets  for  Raw  and  Finished  Products. — The  fact  that  the 
supplier  of  materials  or  parts  is  himself  selling  to  foreign  coun- 
tries the  selfsame  goods  as  those  bought  by  the  American  manu- 
facturer, or  goods  essentially  similar  to  them,  by  no  means  im- 
plies that  there  is  not  an  attractive  and  a  permanent  market  in 
the  very  same  as  well  as  in  other  foreign  countries  for  the  manu- 
facturer 's  finished  product.  The  fact  that  for  twenty  or  thirty 
years  American  makers  of  shoe  machinery,  of  glazed  kid  and 
box  calf,  of  lasts  and  of  other  requirements  of  shoe  manufac- 
turing, have  been  selling  increasing  quantities  of  their  products 
in  every  country  of  Europe  and  in  every  country  the  world 
over  where  shoes  are  manufactured,  has  not  prevented  the 
steady,  healthy,  even  surprising  growth  year  by  year  of  Ameri- 
can export  trade  in  manufactured  boots  and  shoes.  The  leather 
and  the  machinery  that  we  have  sold  to  England  and  Germany 
have  not  interfered  with  our  increasing  sales  to  the  very  same 
countries  of  boots  and  shoes  made  by  the  same  machinery  and 
of  the  same  leather  in  American  factories.  That  our  makers  of 
tanning  machinery  have  pushed  hard  and  successfully  to  intro- 
duce their  apparatus  in  England  and  Germany,  to  teach  tanners 
in  those  countries  how  to  make  American  leather,  has  not  re- 
stricted the  wonderful  growth  of  our  exports  of  finished  leather 
to  the  same  countries.  That  certain  manufacturers  of  lathes  for 
turning  lasts  find  profitable  foreign  markets  for  their  machinery 
has  not  prevented  manufacturers  of  finished  lasts  from  finding, 
in  their  turn,  markets  in  sundry  foreign  countries  well  worthy 
attention  and  cultivation,  even  despite  the  further  fact  that  the 
maple  wood  from  which  our  lasts  are  turned  is  also  exported  in 
crude  or  half  finished  form. 

Therefore,  if   (for  example)    the  manufacturer  of  carriages, 


22  PRACTICAL  EXPORTING 

carts  or  wagons,  learns  that  the  makers  of  practically  every  part 
that  goes  into  his  finished  product  have  for  a  long  time  been  ex- 
porting those  very  parts  and  supplies  to  sundry  foreign  mar- 
kets, he  must  by  no  means  argue  that  there  is  no  chance  left  for 
him  to  find  foreign  customers  for  his  finished  vehicles.  He  can- 
not even  argue  that  were  he  to  find  customers  to-day  they  would 
be  only  temporary  and  that  there  would  be  "no  future"  to  the 
trade.  The  history  of  the  last  half  century  of  our  foreign  trade 
argues  against  this  point  of  view. 

Export  Statistics — The  study  of  statistics  is  often  ae  barren  of 
profitable  result  as  it  is  puzzling  and  tedious.  Yet  that  study 
may  be  helpful  in  those  lines  where  government  figures  are 
closely  classified  and  subdivided.  Our  official  American  export 
statistics  are  as  finely  classified  as  are  any  others  but  still  leave  a 
great  deal  to  be  hoped  for.  It  is  expected  that  studies  now 
under  way  looking  to  reclassification  of  our  export  statistics 
may  result  in  figures  more  helpful  to  manufacturers  of 
many  special  lines.  The  Bureau  of  Foreign  and  Domestic  Com- 
merce of  the  Department  of  Commerce  issues  every  year  several 
publications  detailing  statistics  of  our  export  trade  to  all  the 
world,  which  are  available  at  nominal  costs.  These  statistics 
may  give  a  general  idea  of  the  volume  of  our  export  trade  in 
certain  goods,  particularly  those  classed  together  under  general 
heads,  and  the  distribution  of  such  exports  through  various  for- 
eign markets.  It  is  possible  to  analyze  such  statistics,  learning, 
for  example,  from  a  comparison  of  the  values  per  unit  of  goods 
exported,  the  general  class  or  quality  of  goods  bought  by  dif- 
ferent countries. 

The  man  fond  of  statistical  investigation  may  go  farther  and 
study  the  export  statistics  of  other  manufacturing  countries, 
such  as  England  and  Germany,  learning  to  what  markets  their 
products  are  shipped.  He  may  also  look  into  the  import  statis- 
tics published  by  countries  where  he  thinks  or  has  reason  to  sup- 
pose similar  goods  are  not  manufactured  but  are  purchased  from 
oversea.  Some  information  in  such  regards  may  be  had  from 
authorities  and  publications  of  the  Government  at  Washington. 
Sometimes  statistical  works  of  this  sort  may  be  found  in  public 
libraries. 


WAYS  AND  MEANS  23 

Local  Conditions  Affect  Markets. — All  statistics,  however,  are 
apt  to  be  niisleadiug,  as  they  are  often  disappointing,  when  re- 
liance is  placed  on  them  for  information  as  to  specific  articles. 
The  imports  of  a  certain  line  of  goods  into  any  market  are  often 
affected  by  local  conditions  which  specialized  products  in  the 
line  in  question  may  be  able  to  overcome.  In  modern  industry 
products  fast  change,  not  only  in  specific  details  but  even  in  gen- 
eral character.  Lack  of  imports  into  a  certain  market  in  a 
given  line  may  be  due  to  inadequate  introduction  of  this  line, 
or  even  to  populaV  ignorance  regarding  it.  In  studying  foreign 
markets  it  will  constantly  be  found  that  certain  articles  sell  well 
in  one  market  while  in  a  neighboring  market  of  similar  or  pre- 
cisely identical  character  the  same  articles  are  not  known  at 
all.  American  seamless  hosiery  was  early  and  satisfactorily  in- 
troduced into  Chile  but,  whatever  may  be  the  case  to-day,  it  was 
for  a  long  time  impossible  to  introduce  these  same  goods  into 
the  Argentine  Republic.  At  least  one  manufacturer  found  the 
reason  in  his  own  case.  It  was  that  the  agent  upon  whom  he  de- 
pended in  Buenos  Aires  was  representing  European  hosiery  of 
a  different  character  which  he  had  already  introduced.  Ameri- 
can lamps  for  years  enjoyed  a  considerable  trade  in  the  city  of 
Constantinople,  but  at  Smyrna,  only  a  few  hours  distant  in  the 
same  country  and  subject  to  identical  conditions,  the  same  lamps 
never  obtained  a  footing. 

The  prospects  of  trade  in  some  lines  may  occasionally  depend 
on  varying  geographic  and  climatic  conditions  in  the  same  coun- 
try. Compare,  for  example,  the  relative  altitudes  in  Mexico  of 
the  coast  cities  of  Vera  Cruz  and  Tampico  with  Mexico  City, 
8,000  feet  higher.  Throughout  Central  America  and  in  many  of 
the  countries  of  South  America  similar  conditions  are  encount- 
ered with  an  emphatic  difference  in  temperature  and  general 
climate  between  the  hot,  tropical  regions  at  sea  level  and  the 
temperate  regions  among  the  mountains  in  the  interior  where 
many  of  the  populous  and  important  trade  centers  are  located. 
It  might,  for  example,  be  possible  to  develop  business  in  oil  or 
gas  heaters,  for  use  during  the  cool  evenings,  in  the  regions  of 
high  altitudes,  while  it  would  be  quite  impossible  to  sell  a  single 
heater  in  the  low-lying  coast  cities  of  the  same  country.     The 


24  PRACTICAL  EXPORTING 

question  of  where  goods  can  be  sold  is  not  therefore  a  question 
always  of  "what  countries."  Many  another  consideration  of 
varying  nature  must  be  taken  into  account. 

American  Consuls. — One  of  the  first  sources  of  information 
likely  to  suggest  itself  to  the  average  manufacturer  contemplat- 
ing a  stud}^  of  possibilities  in  his  line  is  sure  to  be  the  American 
consular  service.  The  manufacturer's  thought  is,  "I'll  write  to 
the  American  consuls,  send  them  my  catalogue  and  see  what 
they  say  of  my  chances."  Before  the  manufacturer  takes  this 
step  he  should  not  neglect  inquiring  first  of  the  Bureau  of  For- 
eign and  Domestic  Commerce,  Washington,  to  which  all  con- 
sular reports  of  trade  ultimately  come  through  the  Department 
of  State.  This  Bureau  has  on  file  thousands  of  reports  from  all 
parts  of  the  world  relating  to  almost  every  imaginable  sort  of 
business,  some  of  which  have  been  published  and  some  of  which 
have  never  been  put  into  type.  The  chances  are  strong  that 
much  of  the  information  which  the  manufacturer  wants  is  al- 
ready on  file  and  immediately  available.  Duplicates  of  such  re- 
ports may  be  found  in  the  branch  offices  of  the  Bureau  of  For- 
eign and  Domestic  Commerce  which  have  been  established  at 
New  York,  Boston,  Chicago,  St.  Louis,  New  Orleans,  San  Fran- 
cisco and  Seattle.  If  no  reports  are  already  on  file,  or  if  special 
information  not  included  in  the  reports  is  required,  then  the 
Bureau  itself  will,  if  desired,  send  out  for  the  manufacturer  a 
special  request  for  fresh  information. 

Of  course,  the  manufacturer  can  do  this  for  himself  if  he 
chooses,  but  in  any  event  he  must  not  forget  that  he  will  not 
receive  confidential  information  for  his  own  exclusive  use  and 
benefit.  Because  our  consuls  are  government  officials  acting  for 
the  benefit  of  American  commerce,  and  not  exclusively  for  the 
benefit  of  any  individual  citizen  or  manufacturing  concern,  in- 
formation that  is  gathered  in  response  to  inquiries  will  be  pub- 
lished or  otherwise  placed  at  the  disposal  of  any  one  interested. 
Furthermore,  American  consuls  are  not  located  in  "practically 
every  city  of  the  world,"  as  a  recent  writer  reported.  There 
are  about  300  consulates.  Their  addresses  may  be  obtained  from 
the  Consular  Bureau,  Department  of  State. 

In  correspondence  with  these  officials  letters  should  not  be  ad- 


WAYS  AND  MEANS  25 

dressed  personally — the  address  should  be  the  American  Consul, 
or  the  American  Consul  General,  as  the  case  may  be,  in  such  and 
such  a  city  and  country.  This  in  order  to  avoid  delay,  if  the 
individual  holding  the  office  chances  to  be  absent  from  his  post. 
Some  curious  blunders  are  made  by  manufacturers  in  seeking 
information  directly  from  our  officials  abroad.  In  one  instance 
a  manufacturer  addressed  a  circular  letter  not  only  to  the  consul 
general  at  a  certain  foreign  capital,  but  to  the  vice  consul  gen- 
eral, to  the  deputy  consul  general,  to  the  clerk  at  the  consulate 
general,  and  then  capped  the  climax  by  sending  that  identical 
circular  letter  to  the  American  Ambassador,  to  the  first  secre- 
tary, the  second  secretary  and  the  third  secretary  of  the  embassy. 
Only  one  letter  is,  of  course,  required — to  the  chief  consular 
official.  It  will  not  usually  be  found  desirable  to  address  such 
letters  of  inquiry  to  the  "consular  agents"  who  are  located  at 
minor  points  under  the  jurisdiction  of  a  neighboring  consul. 
The  consular  agents  are  not  always  of  American  birth  and  they 
received  their  appointments  chiefly  in  order  to  have  some  repre- 
sentative to  look  after  the  occasional  requirements  of  the  ser\"ice 
at  points  where  it  is  not  worth  while  maintaining  a  regular 
consul.  They  are  not  paid  salaries,  depend  on  chance  fees  and, 
although  almost  invariably  men  of  character  and  standing  in 
their  respective  communities,  they  have  neither  the  time  nor 
often  the  inclination  to  take  up  trade  inquiries  that  may  be  ad- 
dressed to  their  relatively  insignificant  markets. 

Again,  it  must  by  no  means  be  fancied  that  American  consvils 
are  salesmen.  Do  not  ask  them  to  take  your  samples  around 
among  the  merchants  in  their  city  or  district  and  try  to  get 
you  some  orders.  Do  not  offer  a  consul  your  agency  on  a  com- 
mission basis.  Do  not  ask  him  to  endorse  your  draft  or  guar- 
antee an  account.  Nor  to  deliver  packages  and  collect  payment. 
The  consul  is  a  government  official  and  has  a  good  many  other 
duties  than  those  of  looking  after  the  requests,  even  for  re- 
ports, made  by  our  manufacturers.  No  greater  insult  can  be 
offered  than  an  attempt  to  subsidize  a  consul.  He  will  be 
anxious  and  glad  to  do  what  he  can  when  properly  approached. 
We  have  to  remember  that  we  are  not  the  only  ones  who  are 
seeking  help,   that  very  likely  ten  or  twenty  other  manufac- 


26  PRACTICAL  EXPORTING 

turers  in  our  own  line,  or  ten  or  twenty  different  lines,  may  be 
asking  a  single  consul,  at  almost  the  same  time,  to  give  them  very 
much  the  same  sort  of  service  that  we  want. 

Other  Sources  of  Information. — The  Bureau  of  Foreign  and 
Domestic  Commerce  of  the  Department  of  Commerce  maintains 
** District"  or  "Cooperative"  offices  in  eighteen  of  our  large 
cities  and  ten  or  twelve  Commercial  Attaches  in  as  many 
capitals  of  foreign  countries  which  are  important  markets  for 
American  goods.  In  addition  there  is  also  located  in  Washing- 
ton the  Pan  American  Union  which  is  available  for  information 
regarding  any  of  the  Latin  American  republics.  Furthermore, 
the  seeker  for  information  may  address  himself  to  a  representa- 
tive export  trade  paper  which  may  have  a  good  deal  of  valuable 
information  and  advice  to  offer.  There  are  a  number  of  Ameri- 
can Chambers  of  Commerce  abroad  which  will  be  glad  to  give 
such  information  as  they  may  have  in  reply  to  specific  inquiries. 

Some  information  may  sometimes  be  had  from  export  com- 
mission houses  in  New  York,  New  Orleans  or  San  Francisco,  but 
it  is  not  to  be  forgotten  that  concerns  of  this  sort  are  not  infor- 
mation bureaus.  They  are  business  houses  looking  primarily 
after  their  own  profits.  They  may  or  may  not  be  able  to  give 
the  information  requested,  and  if  able  they  may  or  may  not  be 
willing  to  give  it ;  that  depends  to  some  extent  on  advantages'  or 
disadvantages  to  themselves  which  they  may  see  in  a  proposal. 

Some  of  the  international  banking  houses  may  be  able  at  times 
to  give  advice  or  information  in  regard  to  business  in  certain 
markets  with  which  they  have  large  relations  or  may  send 
abroad  for  such  information.  This,  however,  is  not  the  proper 
function  of  a  banking  house  and  its  foreign  correspondents  are 
busy  people  not  particularly  likely  to  have  either  time  or  in- 
clination to  look  carefully  or  specifically  into  any  inquiry. 

With  all  of  these  many  sources  of  information  available  to 
the  manufacturer  there  remains  little  excuse  for  the  man  genu- 
inely interested  in  looking  into  profitable  foreign  outlets  for  his 
products  if  he  fails  to  gain  a  general  idea  of  chances. 

GEOGRAPHY 

Undoubtedly  the  first  essential  in  the  education  of  a  man, 
young  or  old,  for  the  export  trade  is  a  thorough  knowledge  of 


WAYS  AND  MEANS  27 

the  geography  of  the  world.  Dr.  J.  Russell  Smith,  of  the  Whar- 
ton School,  University  of  Pennsylvania,  has  said:  "It  is  im- 
possible to  discuss  the  industries  of  a  country,  its  commerce,  its 
prospects,  to  give  any  reliable  information  of  value  to  the 
student  of  commerce  without  we  know  the  fundamental  geo- 
graphical facts  that  have  made  it,  and  since  knowledge  is  so 
peculiarly  and  unexpectedly  useful  I  should  say  'that  the  young 
man  who  prepared  to  go  into  work  in  connection  with  the  ex- 
port trade  would  do  well  to  spend  a  half  hour  a  day  for  a  period 
of  years  in  a  study  of  geography." 

A  Foreig"n  Atlas  Needed.^A  paper  acquaintance  with  for- 
eign countries,  capitals,  sea-ports,  commercial  centers,  is  easily 
enough  obtained  and  should  be  sought  by  the  intending  exporter 
during  every  leisure  moment.  A  thoroughly  good  atlas  of  the 
world,  not  one  chiefly  devoted  to  the  United  States  with  a  few 
condensed  plates  of  foreign  countries,  should  be  the  nucleus  of 
any  manufacturer's  export  library.  Above  all  it  should  include 
a  complete  index  enabling  ready  reference  regarding  any  town 
the  whole  world  over  to  appropriate  maps  where  its  location 
may  be  readily  identified.  Too  many  Americans  have  the  hazi- 
est of  ideas  about  the  Dutch  East  Indies,  too  many  "guess"  that 
Jamaica  is  somewhere  in  the  Pacific  Ocean.  A  manufacturer 
asks:  "In  what  country  is  Mauritius?"  Very  likely  the  ques- 
tion will  stump  many  a  reader.  Yet  ships  occasionally  take 
cargo  from  New  York  direct  to  this  island,  famous  and  impor- 
tant in  our  commerce  a  hundred  and  fifty  years  ago  as  the  Isle 
of  France.  It  is  still  one  of  our  export  markets,  although,  of 
course,  far  from  being  of  first  importance.  None  the  less  the 
manufacturer  expecting  to  develop  foreign  sales  for  his  goods 
ought  to  know  as  much  as  possible  about  this,  as  about  every 
other  market  of  the  world. 

Arm-chair  Tours  with  Books. — Most  of  us  promptly  forgot  a 
good  part  of  our  geography  when  we  left  school  or  progressed 
to  so-called  "higher"  branches.  We  may  all  of  us  very  well 
begin  afresh,  and  there  is  no  more  fascinating  study  imaginable 
than  that  of  other  countries,  what  and  where  they  are,  how  they 
are  reached,  their  relations  physical  and  geographical  one  to  an- 
other, the  people  who  inhabit  them,  their  languages  and  customs. 
Evening  tours  at  home  with  atlas,  guide  books,  books  of  travel, 


28  PRACTICAL  EXPORTING 

illustrated  steamship  folders  and  sailing  lists,  mapping  out 
imaginary  or  possible  future  trips,  will  prove  quite  as  interest- 
ing as  the  latest  novel  to  the  business  man  who  has  in  view  the 
increase  of  business  and  profits  through  orders  to  be  secured 
from  the  various  countries  and  peoples  of  the  earth.  In  any 
public  library  such  works  as  the  "Exporter's  Gazetteer  of  Foreign 
Markets"  will  be  fornd  with  details  of  a  country's  financial 
and  economic  organizations.  A  casual  inspection  of  the  hun- 
dreds of  books  of  travel  which  have  flooded  the  market  in  re- 
cent years  will  suffice  to  determine  what  books  of  this  class  give 
information  of  real  use  to  the  business  man  who  wants  to  know 
something  of  the  people  and  the  commerce  of  a  country  where 
he  expects  to  seek  orders  and  the  relative  importance  and  loca- 
tion of  that  country's  principal  towns  and  cities. 

Travel  lectures  and  moving  pictures  will  give  the  man  who  has 
never  set  foot  outside  his  ow^i  country  some  idea  of  foreign  lands, 
their  cities  and  their  life. 

THE  QUESTION  OF  PRICES 

Who  makes  the  cheapest  goods  in  the  world?  Can  anybody 
tell?  Does  anybody  care?  Is  it  not  acknowledged  that  the 
price  argument  is  always  the  last  desperate  resort  of  selling  in- 
efficiency? If  this  is  true  at  home,  it  is  also  true  in  foreign 
countries.  And  yet  we  hear  a  great  deal  about  the  necessity  of 
American  manufacturers  meeting  competitive  prices  in  foreign 
markets. 

American  Competition  not  on  Price  Basis. — No  doubt  this 
is  true  in  a  few  lines  of  staple  goods — but  in  how  many  lines? 
It  may  be  the  case  in  rosin,  sometimes  in  petroleum,  it  is  very 
likely  often  the  case  in  some  of  the  cruder  products  of  iron  and 
steel  mills,  yet  instances  are  not  unknown  where  certain  wdre 
nails  have  been  given  the  preference  in  export  markets,  even 
when  quoted  at  slightly  higher  prices  than  competitors,  because 
that  certain  brand  of  nail  had  been  found  invariably  to  be  re- 
liable, well  made  and  finished,  and  full  weight.  It  may  be,  there- 
fore, that  reputation  and  fame  count  for  something  even  in  such 
highly  competitive  articles.  Granted,  however,  that  there  are  a 
few  staples  in  which  competition  is  almost  if  not  quite  resolved 
down  to  a  price  basis,  yet  it  must  also  be  granted  that  in  the 


WAYS  AND  MEANS  29 

great  bulk  of  trade  in  articles  which  the  United  States  can  supply 
competition  is  not  and  should  not  be  considered  to  be  one  of 
price. 

There  is  hardly  such  a  thing  known  in  many  trades  as  such 
competition.  One  watch  is  different  from  another  watch  of  sepa- 
rate origin  just  as  one  manufacturer's  chair  differs  in  some  re- 
spects from  another  manufacturer's  chair,  or  one  shoe  from  an- 
other shoe,  one  engine  from  another  engine,  and  so  on.  A  certain 
famous  American  dollar  watch  is  not  the  cheapest  watch  in  the 
world  by  any  means.  It  has  found  many  imitators  but  it  still 
maintains  its  sale  alongside  of  watches  that  retail  for  the  price 
at  which  its  makers  wholesale  it.  The  advent  of  the  dollar 
watch  did  not  kill  the  sale  in  the  United  States  or  in  any  other 
country  of  watches  at  $20,  $50  or  $100  each. 

We  have  already  observed  our  American  sales  in  the  most 
highly  competitive  markets  of  the  world,  the  several  manufactur- 
ing countries  of  Europe.  Analyze  the  figures  for  our  former  ex- 
ports to  Germany.  You  will  find  among  our  most  important 
items  agricultural  implements,  machine  tools,  automobiles,  type- 
writing machines,  sewing  machines,  leather  and  boots  and  shoes. 
These  items  have  amounted  to  an  annual  total  of  $14,000,000  or 
$15,000,000.  Each  and  every  one  of  them  competed  on  German 
soil  with  big  and  important  German  manufacturing  industries 
which,  in  their  turn,  actually  exported  their  own  products  to 
many  markets  foreign  to  them.  Yet  our  goods  paid  ocean 
freights  and  German  duties  and  sold  in  Germany  to  the  big  an- 
nual amounts  just  named  in  spite  of  local  German  competition. 
Incidentally,  it  is  again  to  be  observed  that  ocean  freights  offer 
no  obstacle  at  all  to  selling  possibilities  in  foreign  countries.  A 
manufacturer  can  lay  his  goods  down  in  China  as  cheaply,  and 
usually  more  cheaply,  than  in  Colorado.  Although  not  suscep- 
tible of  actual  demonstration,  it  is  for  good  reasons  believed  to 
be  a  fact  that  most  American  manufacturers  who  export  their 
goods  make  rather  better  profits  in  that  trade  than  they  do  in 
the  home  trade. 

Both  Cheap  and  Expensive  Goods  Sold. — In  every  city  the 
whole  world  over  both  high  priced  goods  and  cheap  goods  are 
bought  and  sold.  Paris  and  New  York  are  no  different  in  this 
respect  from  Constantinople  and  Cape  Town.    Always  there  are 


30  PRACTICAL  EXPORTING 

some  merchants  who  want  the  very  best  obtainable  irrespective  of 
price;  indeed,  some  who  demand  only  the  highest  priced  goods 
they  can  find,  successfully  do  business  alongside  of  others  who  can 
use  nothing  but  very  cheap  goods.  Probably,  as  there  are  more 
poor  people  in  the  world  than  rich,  there  is  a  greater  demand  for 
goods  that  cost  little.  Then,  too,  there  is  the  important  demand 
for  intermediate  grades.  The  point  at  issue  is  that,  so  far  as  price 
is  concerned,  there  are  merchants  in  every  country  and  in  every 
city  to  buy  any  given  article  no  matter  what  its  price.  Caracas, 
Venezuela,  papers  publish  the  announcement  of  a  local  flour  im- 
porter advertising  a  certain  well  known  brand  of  American  flour 
and  boasting  in  big  black  letters  that  that  flour  is  the  most  costly 
of  any  imported  into  Venezuela.  An  American  manufacturer  of 
high  grade  steam  packing  has  worked  up  a  large  and  profitable 
trade  in  Europe.  He  used  to  sell  his  product  in  Germany  at 
two  or  three  times  the  price  which  the  highest  cost  native  Ger7 
man  packing  commanded.  He  succeeded  in  doing  this  because 
he  demonstrated  to  buyers  and  users  of  packing  that  his  is  worth 
what  he  asks  for  it. 

The  reluctance  manifested  by  some  American  manufacturers 
to  seek  foreign  outlets  for  their  wares  because  they  fear  local  or 
European  competition,  or  because  their  goods  are  not  "cheap," 
would  be  amusing  were  it  not  even  more  irritating. 

An  American  cutlery  manufacturer  says  he  used  to  sell  high 
grade,  expensive  tailor's  shears  and  other  specialties  to  Germany 
because  the  Germans  make  nothing  so  good.  Cheap  German 
shears  and  scissors  have  paid  American  duties  and  stocked  a  large 
proportion  of  American  cutlery  shops  and  department  stores. 
There  is  not  a  country  in  the  world  where  quality  is  not  appreci- 
ated and  paid  for.  Single  orders  amounting  to  thousands  of 
dollars  were,  before  the  war,  received  from  Germany  for  Ameri- 
can safety  razors,  perhaps  because  they  are  novelties.  But  prac- 
tically every, manufacturer  in  the  United  States  makes  "novel- 
ties," that  is,  scarcely  any  one  manufacturer  exactly  duplicates 
goods  made  by  any  other  manufacturer.  Selling  goods  means 
something  more,  at  home  or  abroad,  than  offering  lower  prices 
than  any  one  else  can  offer.  Quality  and  novelty  are  telling 
factors  in  influencing  orders  in  any  part  of  the  world. 

Quality  Versus  Price. — It  is  widely  acknowledged  that  in  no 


WAYS  AND  MEANS  31 

other  country  is  the  efficiency  to  be  found  in  our  American  fac- 
tories equaled  or  approached.  It  is  this,  which,  coupled  with 
quantity  production,  organization,  system  and  automatic  ma- 
chinery, all  backed  by  American  inventive  genius  and  versatility, 
enables  us  to  maintain  high  wages  and  a  high  standard  of  living 
for  our  employees  and  yet  produce  goods  of  quality  at  reasonable 
prices,  which  means  prices  that  commend  themselves  in  competi- 
tion no  matter  whether  higher  or  lower  than  prices  at  which 
some  other  manufacturers  offer  their  own  goods. 

It  is,  however,  notably  in  the  way  of  quality  goods  that  Ameri- 
can manufacturers  exceFand  have  made  their  footing  firm  in  the 
world's  markets.  No  buyers  of  experience  in  international  trad- 
ing look  to  the  United  States  for  trash.  It  should  remain  the  am- 
bition of  every  manufacturer  who  enters  export  markets  to 
maintain  the  standing  and  the  prestige  of  the  American  nation  in 
this  regard.  He  who  transgresses  should  be  torn  limb  from  limb 
by  his  indignant  neighbors. 

Quality  Builds  Up  Business. — The  Hon.  William  C.  Redfield, 
before  becoming  Secretary  of  Commerce,  was,  as  is  well  known, 
for  years  actively  engaged  in  the  export  business  as  foreign 
representative  of  certain  American  manufacturers  of  engineering 
appliances.  Addressing  an  annual  convention  of  the  National 
Canners  Association,  Mr.  Redfield,  among  other  things,  took  up 
the  question  of  competing  prices  in  foreign  markets. 

"An  amusing  ignorance  of  the  factors  in  foreign  competition  is 
frequently  exhibited  in  our  public  discussions.  What  you  hear 
is*  price,  price  and  again  price.  Goods  compete  in  price?  Well, 
that  is  true,  but  it  is  not  the  whole  truth.  Indeed,  there  are 
places  where  it  is  a  very  small  part  of  the  truth,  else  there  would 
not  be  different  qualities  of  goods  at  varying  prices  in  the  market. 
There  are  men  in  every  country  who  are  willing  to  pay  for 
quality  if  they  know  it  is  there  and  always  kept  there.  ...  I  re- 
call a  business  house  that  deliberately  started  in  to  develop  a 
foreign  trade.  There  were  two  courses  open  to  them — the 
temporary  and  the  permanent — the  dime  course  and  the  dollar 
course.  They  could  get  rather  quickly  a  lot  of  dimes  they  did 
not  have,  but  they  believed  it  would  be  better  in  the  long  run  to 
defer  those  dimes  even  a  few  years  and  wait  for  the  dollars,  and 
so  they  went  at  it  that  way.     They  did  not  make  the  cheapest 


32  PRACTICAL  EXPORTING 

article  they  could  produce  and  endeavor  by  that  means  to  rush 
the  market.  On  the  contrary,  they  preferred  to  make  a  rather 
better  article  than  was  for  sale  in  their  particular  markets  and 
slowly  and  gradually  build  up  a  business  on  those  lines,  and 
this  policy  succeeded.  They  found  people  enough  to  pay  for 
good  quality  and  while  there  were  times  when  more  goods  could 
have  been  sold  if  they  had  been  cheaper,  the  truth  was  never  lost 
sight  of  that  business  done  on  that  plane  would  very  likely  be 
confined  to  that  single  transaction  or  at  least  to  but  a  few  more. 
Cheapness  is  not  the  main  thing  to  be  achieved.  Cheapness  in 
relation  to  high  quality  is  all  very  well,  but  quality  will  build  up 
a  business  that  will  stay  while  cheapness  goes  out  of  the  door. ' '  ^ 
American  Improvements  and  Innovations. — The  element  of 
novelty,  as  has  just  been  suggested,  exists  in  practically  every 
article  known  to  commerce,  or  by  the  exercise  of  a  little  ingenuity 
can  be  made  to  apply,  effectively  advocated  and  advertised.  The 
reply  to  the  question  whether  we  shall  be  able  to  keep  new  trade 
in  foreign  markets  is  that  so  doing  will  depend  on  the  ability 
of  our  manufacturers  to  impress  the  actual  desirability  of  their 
goods,  no  matter  if  they  cost  a  little  more  than  former  favorites. 
Our  standard  goods  are  not  as  a  rule  like  goods  used  for  the 
same  purposes  perhaps,  made  by  European  manufacturers.  We 
could  not,  if  we  would,  produce  some  of  the  goods  sold  all  over 
the  world  by  our  competitors  in  Europe.  Certainly  we  would 
not  offer  many  of  them,  for  we  have  developed  in  this  country 
other  goods  of  the  same  application  which  we  consider,  for  rea- 
sons conclusively  good  to  us,  far  better  than  the  others. 

1  E.  C.  Simmons,  head  of  the  great  St.  Tyjiiis  hardware  house  which  bears 
his  name,  in  a  paper  presented  to  the  first  Foreign  Trade  Convention  de- 
clared, relative  to  his  own  business:  "We  have  found  our  greatest  suc- 
cess in  selling  goods  of  extraordinary  value,  or  the  very  best  quality;  that 
it  was  entirely  useless  to  send  cheap  stuff  abroad,  or  to  make  any  effort 
to  sell  it  in  foreign  lands;  biit  when  we  came  to  offer  goods  that  were 
superlative  in  quality,  and  better  than  were  made  in  other  countries,  it 
was  not  very  difficult  to  sell  them,  and  those  sales  have  continued  to  in- 
crease each  year." 

Tn  his  review  of  the  trade  of  Austria-Hungary  for  1014,  the  American 
consul-general  at  Vienna  wrote:  "American  goods  must  find  their  market 
hero  more  by  superiority  of  quality,  greater  tastefuliiess  in  packing  and 
in  the  details  of  offering  to  purchasers,  and  the  exercise  of  more  skilful 
arts  of  salesmanship  than  their  competitors.  It  is  not  so  essential  to  offer 
cheaper  articles." 


WAYS  AND  MEANS  33 

It  is  the  distinctive  and  advantageous  characteristics  of  our 
trade  and  industry  which  all  of  us  ought  to  preach  and  empha- 
size, and  which  ought  to  gain  for  us  new  trade  everywhere  and 
hold  for  us  the  footing  so  secured. 

Lightness  and  grace  coupled  with  ample  strength  character- 
ize many  an  American  piece  of  hardware  which  must  compete 
with  heavy  if  substantial,  but  often  crude  and  rough,  European 
articles  of  the  same  description.  We  should  indignantly  refuse 
to  supply  some  of  the  locks  which,  until  recently  at  least,  French 
and  English  manufacturers  have  shipped  to  some  markets  where 
we  compete  with  them,  and  our  scorn  and  ridicule  would  know 
no  bounds  if  we  were  asked  to  make  their  great  jointed  keys 
weighing  a  pound  apiece  which  have  to  be  folded  together  like  a 
jack-knife  to  get  them  into  the  pocket. 

Our  threshing  machines  work  on  a  different  principle  alto- 
gether from  that  of  British  machines.  The  British  "rub  out" 
the  grain,  ours  thresh  it  out  with  "teeth  and  concaves."  Ours 
are  light,  sometimes  they  are  called  flimsy ;  they  are  not,  like 
the  British,  intended  to  be  bequeathed  as  heirlooms  to  posterity. 
The  American  cost  much  less  than  the  British,  have  double  or 
treble  their  capacity,  require  only  half  the  crew.  They  art 
built  to  do  lots  of  work  and  do  it  fast,  and  to  last  a  reasonable 
length  of  time.  Wherever  "hands"  are  scarce  and  "time  is 
money,"  there  the  American  threshing  machine  will  come  into  its 
own.  The  same  sort  of  argument  applies  with  equal  force  to 
many,  probably  to  most  other  kinds  of  x\merican  machinery. 

The  marvelous  growth  of  our  great  export  trade  in  boots  and 
shoes  was  partly  due  to  the  fact  that  we  supplied  six  or  eight 
different  widths  and  in  each  width  a  full  range  of  sizes  and  half 
sizes.  Our  dealers  had  found  it  possible  by  carrying  suitable 
stocks  to  fit  neatly  any  normal  foot  that  presented  itself.  The 
growth  of  the  retail  shoe  trade  in  the  United  States,  encouraged 
by  this  system  of  manufacturing,  almost  wholly  put  out  of  busi- 
ness the  custom  shoemaker  here.  In  Europe  and  in  other  coun- 
tries no  such  elaborate  assortment  of  sizes  and  widths  had  been 
available,  and  the  discriminating  buyer,  finding  it  impossible  to 
fit  himself  in  a  ready-made  shop,  betook  himself  in  desperation 
to  the  custom  shoemaker.  It  is  a  question  \^hether  with  our  pres- 
ent elaboration  in  the  ready-made  clothing  industry  our  clothing 


34  PRACTICAL  EXPOBTING 

makers  might  not  achieve  somewhat  similar  results  were  an  ag- 
gressive effort  to  be  made. 

We  do  a  great  many  things  differently  in  the  United  States. 
Quarter-size  collars  were  first  made  to  order  for  certain  exclusive 
retail  shops  in  New  York  by  German  manufacturers,  who  were 
doubtless  vastly  amused  at  the  novelty  of  the  orders.  Those 
makers  never  had  enterprise  enough  to  try  to  introduce  quarter 
sizes  in  their  own  or  in  any  other  market.  They  plodded  along 
making  up  quarter-size  orders  for  these  American  shops  and 
forgetting  all  about  them  as  soon  as  their  bills  were  paid.  Mean- 
while, American  manufacturers  were  quick  to  see  the  point.  The 
system  was  introduced  throughout  the  country,  and  it  was  one  of 
those  strange  facts  encountered  in  traveling  abroad  that  Euro- 
pean tourists  could  find  no  other  quarter-size  collars  in  Berlin 
shops  than  those  of  American  manufacture.  The  Germans 
themselves  had  not  been  "shown."  IMen's  shirts  may  be  taken 
as  another  out  of  hundreds  of  illustrations.  The  different  sizes, 
with  varying  sleeve  lengths,  represent  practice  utterly  unknown 
in  other  countries. 

Making  Prices  Attractive. — It  is  clear  enough,  almost  without 
stopping  to  take  thought,  that  there  may  be  a  great  difference  in 
the  effect  of  prices  named  in  different  ways.  A  bald  statement 
of  dollars  and  cents  certainly  can  never  appeal  to  possible  buyers 
as  would  the  same  net  returns  to  the  manufacturer  if  put  in  a 
different  way.  In  later  pages  we  shall  examine  some  of  the  forms 
in  which  quotations  may  be  made.  Meanwhile,  it  should  be  noted 
that  a  price  delivered  at  some  interior  railway  station  of  the 
United  States  can  never  appeal  to  a  foreign  buyer  as  would  a 
price  delivered  on  board  outgoing  steamer  at  New  York  or  other 
port,  for  buyers  in  foreign  countries  know  little  about  distances 
or  railway  freights  in  the  United  States  and  are  quite  unable  to 
guess  what  charges  to  and  at  ports  will  amount  to,  and,  in  conse- 
quence, judge  of  what  the  goods  they  wish  to  buy  will  probably 
cost  them  when  they  are  received. 

Similarly,  what  are  known  as  c.i.f.  quotations  (cost,  insurance 
and  freight)  are  still  more  likely  to  bring  orders  from  foreign 
customers  because  with  such  quotations  in  hand  the  buyer  is  still 
better  enabled,  as  we  shall  see,  to  estimate  what  he  can  resell  the 
goods  for  at  a  profit.     Quotations  of  prices  may  also  be  affected 


WAYS  AND  MEANS  35 

by  the  currencies  in  which  the  prices  are  named.  Dollars  may 
not  be  so  effective  sometimes  as  pounds  or  francs.  It  seems 
probable  that  our  German  competitors  have  often  excelled  in  the 
tact  shown  in  the  quotation  of  prices  especially  in  combination 
with  some  credit  terms  that  have  been  extended,  where  buyers  of 
the  goods  have  had  no  suspicion  that  the  prices  were  actually 
modified  by  the  credits  extended,  that  they  were  paying  for  these 
credits  in  the  prices  named. 

Higher  or  Lower  Prices  for  Export. — "Export  prices"  has 
sometimes  been  adopted  as  a  slogan  on  the  assumption  that  the 
term  is  equivalent  to  "rock  bottom  prices,"  indicating  an  espe- 
cially and  unusually  low  quotation.  It  is,  indeed,  a  fact  that 
many  manufacturers  name  lower  prices  to  foreign  than  to 
domestic  customers.  It  is  also  a  fact  that  other  manufacturers 
realize  higher  prices  and  make  larger  profits  on  their  export 
shipments.  Perhaps  the  principle  of  "all  the  traffic  will  bear" 
is  that  which  usually  governs.  Whether  that  is  a  sound  prin- 
ciple in  any  business,  domestic  or  foreign,  is  widely  questioned 
nowadays. 

Those  who  make  their  export  lower  than  their  domestic  quota- 
tions may  be  governed  by  two  considerations :  necessity  in  foreign 
markets  on  account  of  competition  with  the  world's  producers; 
revised  cost  calculations,  eliminating  all  or  nearly  all  of  the  sell- 
ing expense  charged  against  domestic  goods.  It  is  clear  that 
lower  export  prices,  if  they  succeed  in  winning  trade,  fill  vacant 
time  in  the  factory,  keep  otherwise  idle  machines  at  work,  and 
carry  a  share  of  the  overhead  expense.  They  are  therefore  to  be 
regarded  as  justified  in  any  case,  when  necessity  or  policy  dic- 
tates their  quotation.  Yet  the  element  of  profit  is  never  to  be 
lost  sight  of,  whether  in  actual  surplus  of  returns  over  costs  or 
in  the  taking  care  of  a  part  of  the  "overhead"  and  thus  enhanc- 
ing profits  (or  reducing  costs)  on  other  products.  In  one  way  or 
another  export  trade  must  be  profitable. 

High  export  prices  are  justifiable — when  they  are  obtainable, 
and  many  American  manufacturers  get  them.  Obviously,  how- 
ever, there  is  the  possibility  of  restricting  sales  and  output.  The 
manufacturer  who  is  accustomed  only  to  his  home  and  highly  pro- 
tected market  has  to  take  into  consideration  the  increased  cost  of 
his  goods  when  landed  in  a  foreign  market,   through  import 


36  PRACTICAL  EXPORTING 

duties  which  have  to  be  paid,  carriage  and  other  expenses  in- 
separable from  any  importing  business,  the  investment  of  capital 
in  doing  business  on  the  scale  required  in  oversea  transactions, 
etc.  It  is  probable  that  an  increase  over  domestic  prices  in  quo- 
tations to  the  export  trade  is  oftenest  a  mistake,  unless  warranted 
by  the  extra  expense  involved  in  adequate  export  packing  or 
something  of  that  sort.  "Good  value  for  the  money"  is  just  as 
sure  a  claim  to  favor  abroad  as  at  home. 


CHAPTER  II 

SOME  MISTAKEN  IMPRESSIONS 

Popular  Misunderstandings  about  Export  Problems — Mistaken 
Ideas  as  to  Credit  Terms — Foreign  Branches  of  American 
Banks  Desirable  but  not  Essential — Lack  of  American  Ships 
Not  a  Handicap  to  Foreign  Trade  Expansion — Combinations 
of  Manufacturers  to  Get  Export  Business  by  no  Means  a  New 
Scheme — When  American  Goods  may  be  Adapted  to  Market 
Tastes  or  Preferences. 

SPEAKERS  and  writers  on  export  trade  problems,  whose 
numbers  have  grown  so  astonishingly  in  recent  years,  have 
given  wide  currency  and  popular  credence  to  many  mis- 
taken notions.  It  is  worth  our  while  examining  some  of  these 
misapprehensions  both  to  clear  our  own  minds  and  arrive  at  an 
appreciation  of  the  real  state  of  affairs,  because  they  have  been 
widely  reprinted  and  read  throughout  the  world.  Those  who 
travel  abroad  or  who  meet  foreign  buyers  in  this  country  should 
be  in  position  to  present  the  true  state  to  them.  This  should 
be  a  part  of  our  propaganda  in  favor  of  the  United  States  and 
its  position  in  international  markets.  Every  American  who 
ever  meets  foreigners,  whether  engaged  in  commerce  or  not, 
should  be  able  to  argue  the  case  of  our  country  intelligently, 
present  its  claims  forcefully,  uproot  prejudices  and  mistaken 
ideas — many  of  which  our  own  people  have  been  instrumental  in 
ignorantly  advertising,  some  of  which  our  competing  traders 
in  the  world's  markets  have  been  quick  to  seize  and  emphasize. 
A  rather  full  consideration  of  facts  as  regards  the  trade  and 
position  of  the  United  States  seems  to  be  called  for  at  this  point. 

AMERICAN  TRADE  WAS  NEVER  LAGGING 

Statistics  and  comments  already  offered  demonstrate  the  falsity 
of  the  impression  which  may  be  general,  which  has  even  been 
deliberately  conveyed  by  some  speakers  and  writers  who  ought  to 

37 


38  PRACTICAL  EXPORTING 

know  better,  that  the  export  trade  of  the  United  States  in  times 
of  peace  has  been  small  or  lagging.  It  was  most  emphatically 
nothing  of  the  sort.  It  was  big,  important  and  growing — was 
growing  at  a  good  deal  faster  rate  than  was  the  export  trade 
of  any  other  manufacturing  country  even  before  the  outbreak 
of  the  European  War.  The  fact  that  the  total  export  trade  of 
the  United  States  was,  before  the  war,  actually  larger  than  the 
export  trade  of  Germany  is  seldom  known  or  referred  to.  As  a 
matter  of  fact  we  ranked,  in  normal  times,  second  only  and  close 
up  to  the  United  Kingdom  as  an  exporting  nation.^  It  is  certain 
that  our  position  as  an  exporter  will  not  be  less  important  in  the 
future  than  hitherto.  It  is  usually  speakers  from  the  platform, 
rather  than  writers  entrusting  themselves  to  black  and  white, 
who  expatiate  learnedly  on  the  disadvantages  and  unfavorable 
economic  conditions  of  the  United  States,  repeating  even  after 
many  corrections  the  absurdest  of  misstatements  easily  enough 
disproved  by  any  one  who  cares  to  ask  for  official  statistics.  The 
"smallness"  of  our  export  trade,  as  it  was  sometimes  called,  is 
only  one  of  the  general  misapprehensions  and  popular  mistakes 
which  we  may  here  note. 

LONG  CREDITS 

Among  such  notions,  perhaps  that  which  contrasts  American 
cash  terms  with  European  long  credits  is  the  most  mistaken  and 
most  harmful.  We  are  constantly  encountering  stories  of  the 
twelve  or  eighteen  months'  credits  which  it  is  said  European 
manufacturers  and  exporters  have,  hitherto,  habitually  extended 
to  their  customers  in  markets  where  American  manufacturers 
attempt  to  compete.  It  is  seldom  that  reports  to  this  effect  are 
intelligently  made  or  qualified.  The  excessive  credits  just  men- 
tioned, when  extended  at  all  by  European  shippers,  seldom  apply 
to  more  than  two  branches  of  trade,  namely,  the  piece-goods  trade 
and  the  agricultural  machinery  business.  In  the  latter,  Ameri- 
can manufacturers  also  have  frequently  extended  credit  facilities 
and  certainly,  in  view  of  the  universal  sale  of  American  agri- 
cultural machinery,  have  not  suffered  through  failure  to  com- 
pete in  any  respect  with  Europeans. 

1  RpfoiPTKo  is  mado  to  exports  of  doinestic  merchandise.  Care  must  al- 
ways be  taken  to  make  comparisons  of  exports  on  the  same  basis. 


SOME  MISTAKEN  IMPRESSIONS  39 

To  a  considerable  extent,  however,  the  talk  of  "long  credit" 
terms  refers  to  former  German  practice  in  oversea  trade.  With 
rare  exceptions  this  talk  is  really  based,  not  on  extraordinary 
length  of  credit  periods,  but  on  indiscriminate  and  reckless  selec- 
tion of  risks  which  were  granted  credits.  Three  or  at  most  four 
months  was  the  customary  extreme  limit  of  the  term  extended  by 
the  German  manufacturer  or  exporter — longer  terms  were 
extraordinary  and  exceptional.  But  the  Germans  in  their  eager- 
ness to  get  business  undertook  direct  relations  with  small,  even 
insignificant  firms  in  many  countries,  which  ought  not  to  rank  as 
importers  at  all  but  should  buy  their  requirements  from  larger 
local  houses.  Because  such  individual  transactions  have  been 
small,  scant  attention  has  been  paid  to  financial  risks  involved, 
little  if  any  enquiry  made  as  to  the  standing  or  even  the  char- 
acter of  the  customers,  and  what  we  regard  as  conservative,  pru- 
dent business  practices  discarded.  A  German  salesman  for  illus- 
trated post  cards  sold  $40  or  $50  worth  to  any  and  every  news- 
stand he  happened  across,  and  drew  a  draft  at  ninety  days  for 
his  payment.  Local  bankers  through  whom  such  a  draft  was 
passed  spent  hours  in  trying  to  locate  the  drawee  of  whom  they 
never  before  heard  as  a  "  business  house. ' '  This  is  an  illustration 
from  actual  experience  in  small  towns  in  Cuba. 

It  is  talk  from  such  sources  which  of tenest  reaches  tourist  and 
other  non-commercial  critics  of  ours ;  seldom  are  remarks  at  all 
similar  made  by  large  and  responsible  importers — the  kind  we 
Americans  want  as  our  customers.  It  goes  without  saying  that 
German,  British  or  any  other  relations  with  foreign  branches  of 
their  own  houses,  and  credits  locally  extended  by  the  latter,  have 
always  been  and  will  be  in  a  totally  different  category. 

Cash  Terms. — Our  American  "cash"  terms  are  by  no  means 
unusual  even  in  international  trade.  They  are  more  often  than 
not  demanded  even  by  our  European  competitors.  No  conserva- 
tive or  successful  business  house  in  any  country  will  grant  ex- 
tended credit  to  a  new  or  unknown  customer  in  any  land.  The 
extent  and  growth  of  facilities  must  always  depend  primarily  on 
the  creditors'  acquaintance  and  experience  with  his  debtors. 
Credits  and  general  business  relations  of  great  British  houses 
with  their  foreign  customers  may  depend  on  an  acquaintance  and 
trade  reaching  back  fifty  or  even  a  hundred  years.     These  are 


40  PRACTICAL  EXPORTING 

extended  under  exceptional  conditions.  What  is  known  as  the 
ninety  days'  sight  draft,  documents  for  acceptance,  may  be  re- 
garded as  the  general  principle  on  which  the  international  com- 
merce of  the  whole  world  is  founded.  What  those  terms  mean 
and  how  credit  may  thus  be  extended  to  thoroughly  desirable  and 
responsible  foreign  connections,  without  at  the  same  time  losing 
the  use  of  capital,  will  be  explained  when  we  reach  the  appropri- 
ate cliapter  in  this  book. 

It  is  the  German  trade  which  has  popularly  been  charged  with 
the  general  over  extension  of  credit  facilities  in  foreign  markets, 
yet  even  in  Germany  strictly  cash  terms  were  in  force  in  con- 
nection with  the  export  trade,  particular!}^  in  that  large  propor- 
tion of  Germany's  export  trade  which  was  not  done  direct  by 
manufacturers  but  was  handled  through  export  merchants  in 
Hamburg.  The  German  machinery  manufacturer  when  he  sold 
one  of  these  export  merchants  demanded  one-third  cash  with  or- 
der and  balance  upon  delivery  of  the  machinery.  Practically  all 
German  mining  and  agricultural  products  as  well  as  imports  re- 
sold for  export,  were  strictly  cash  lines  in  Germany. 

The  trade  of  Germany  with  the  United  States  was  practically 
a  cash  trade,  not  because  American  importers  do  not  deserve 
credit  but  because  they  found  attractive  economies  in  paying 
cash.  When  German  shippers  extended  credit,  interest  was  al- 
ways charged  at  6  per  cent,  from  date  of  invoice,  while  the  prices 
at  which  export  goods  were  sold  and  invoiced  varied  materially 
according  to  the  risk  involved  and  the  credit  term  extended. 
Foreign  buyers  of  German  woolens  on  six  months'  credit  found 
they  could  obtain  10  per  cent,  discount  when  they  proposed  to 
pay  cash.  In  years  not  long  preceding  the  war,  German  manu- 
facturers met  with  some  very  severe  losses  in  extending  credits 
in  direct  business  relations  with  certain  markets  of  the  Far 
East  and  the  whole  system  of  long  term  credits  was  generally  con- 
demned b}^  bankers  as  well  as  by  public  opinion.^ 

1  "Everywhere  in  Germany  voices  are  heard  ajrainst  the  undue  expan- 
sion of  long  term  credits  at  home  and  abroad.  In  times  of  financial 
stringency,  such  as  prevailed  in  Germany  during  the  Morocco  controversy 
with  France,  the  result  of  looseness  in  credit  dealings  was  plainly  ap- 
parent. 

"The  English  attitude  on  the  subject  of  losing  occasional  orders  to  the 
German   export  trade  where  the   latter   holds  out  better  credit  terms  is 


SOME  MISTAKEN  IMPRESSIONS  41 

So  far  as  British  shippers  are  concerned  it  will  be  found  that 
they  have  been  blamed  just  as  frequently  as  have  American  manu- 
facturers in  regard  to  their  attitude  toward  extending  credit 
accommodations  to  foreign  customers.  American  manufacturers 
were  actually  held  up  as  a  model  to  British  manufacturers  in  the 
report  of  the  British  Commercial  Mission  to  Canada.  "Then 
there  is  the  matter  of  terms  of  credit.  American  firms  are  said 
in  particular  to  be  much  more  elastic  than  their  British  competi- 
tors in  regard  to  the  requirements  of  their  customers  and  to  do 
all  in  their  power  to  facilitate  matters  for  them. " 

Few  if  any  of  our  competing  European  manufacturers  can  af- 
ford to  carry  any  large  number  of  foreign  credit  risks,  to  tie  up 
capital  in  such  transactions  with  customers  indiscriminately. 
They,  like  American  manufacturers,  must  secure  cash  within  a 
reasonable  time  after  shipments  of  goods  or  thej^  cannot  continue 
in  business.  Credits  extended  by  export  merchants,  profession- 
ally and  solely  devoted  to  this  branch  of  commerce,  with  large 
capital  invested  for  the  single  and  express  purpose  of  taking  care 
of  credits,  or  through  intimate  alliance  with  foreign  bankers,  is  a 
form  of  business  totally  unlike  tliat  of  a  manufacturer's  export 
trade  relations,  whether  that  manufacturer  be  American,  British 
or  German. 

Our  American  principle  of  quickly  and  frequently  turning 
over  capital  through  cash  returns,  for  which  large  discounts  are 
offered,  or  reasonably  short  credit  terms  and  prompt  collections, 
is  more  than  sound — it  is  enviable.  When  thirty  days,  or  sixty 
days,  is  the  normal  trade  limit  at  home  we  can  and  we  do  stretch 
it  to  ninety  days  in  the  export  trade,  and  rare  is  the  foreign  cus- 
tomer of  desirable  character  whom  that  term  will  not  satisfy. 
In  later  chapters  we  shall  learn  how  three  months  and  double 
three  months  terms  are  easily  to  be  granted,  are  to-day  readily 
extended  by  experienced  exporters — but,  of  course,  customers  pay 
for  the  time  they  demand.  Meanwhile,  here  are  some  comments 
of  Americans  of  practical  experience  which  may  serve  to  support 
the  author's  contentions. 

worth  noting.  The  English  oxporters  feel  that  longer  credit  is  a  poor 
selling  argument  and  most  lilcely  to  appeal  to  customers  whose  business 
is  less  desirable."  (Archibald  J.  Wolfe,  Report  on  Foreign  Credits,  De- 
partment of  Commerce.) 


42  PRACTICAL  EXPORTING 

Credit  Delusions. — In  regard  to  credits,  James  A.  Farrell, 
President  of  the  United  States  Steel  Corporation  and  Chairman 
of  the  National  Foreign  Trade  Council,  has  said:  "A  delusion 
has  existed  that  the  trade  of  the  United  States  with  foreign  coun- 
tries is  carried  on  within  narrow  limits ;  that  we  will  not  extend 
credits,  and,  in  consequence,  a  large  volume  of  trade  goes  to 
Europe  which  would  come  here  were  we  to  grant  credits  of  six 
to  nine  months.  Where  there  is  a  substantial  basis  for  credit, 
American  manufacturers  will  not  be  found  lacking  in  devising 
means  to  grant  reasonable  and  proper  accommodation.  It  will 
be  invariably  found  that  where  extended  credits  are  given,  the 
seller  charges  an  increased  price  and  buyers  do  not  benefit  to  the 
extent  which  reasonably  prompt  payment  entitles  them  to." 

Short  Term  Principle  Right.— T.  W.  Van,  speaking  at  the  St. 
Louis  Foreign  Trade  Convention,  stating  that  from  nothing  he 
had  worked  up  an  export  business  of  a  quarter  of  a  million  dollars 
for  the  Koken  Barber  Supply  Company,  said  on  the  subject  of 
credits:  "I  haven't  much  sympathy  with  the  theory  that  we 
have  got  to  copy  after  any  other  nation  in  regard  to  credits.  .  .  . 
I  will  admit  that  if  we  go  ahead  on  our  regular  American  system, 
if  we  establish  credits  of  the  kind  that  the  American  manu- 
facturer feels  necessary  for  him  to  work  under,  it  is  going  to 
take  longer  but  it  is  only  a  question  of  taking  a  little  longer  and 
having  it  right,  than  going  a  little  faster  and  having  it  wrong. 
I  know  that  in  our  business  we  have  not  had  to  do  it.  And, 
again,  I  will  say  that  our  line  was  a  luxury,  yet  we  insisted  on 
regular  credits  with  ninety  days  as  the  limit. ' '  ^ 

FOREIGN  BRANCH  BANKS 

Another  misapprehension  regarding  our  export  trade  and  its 
possibilities  which  is  ail  too  general,  has  to  do  with  the  lack  here- 
tofore existing  of  branches  of  American  banks  in  foreign 
markets.  We  have  been  told  of  the  many  branches  of  British, 
German,  French,  Spanish,  Italian  and  other  European  banks,  al- 
though not  always  with  great  clearness  or  exactness;  we  have 
been  warned  that  these  bankers  discriminate  against  American 
shippers;  it  has  been  asserted  that  European  shippers  through 

1  Yet  in  the  industry  represented  by  this  speaker  extended  credits  are 
common  in  the  home  markets  of  this  as  of  other  countries. 


SOME  MISTAKEN  IMPRESSIONS  43 

such  foreign  branches  of  their  own  banks  enjoy  better  facilities 
than  have  we  in  regard  to  credit  information  about  customers 
and  in  regard  to  rates  of  exchange  and  extension  of  credits. 
Some  of  our  advisers  have  gone  so  far  as  to  declare  that  it  is  im- 
possible for  our  American  trade  "to  expand"  until  we  have  long 
chains  of  our  own  banks  abroad,  quite  forgetful  of  the  marvelous 
growth  of  American  export  trade  in  recent  years  in  the  face  of 
the  lack  of  these  facilities.  We  have  heard  tales  of  the  betrayal 
of  American  interest  by  branches  of  European  banks  in  South 
American  countries,  of  copies  of  American  invoices  sent  by  such 
banks  to  their  fatherland  for  the  information  of  their  own  manu- 
facturer.    How  true  are  these  allegations? 

Credit  Report  Facilities. — No  one  who  knows  will  deny  that 
there  are  actually  available  in  the  United  States  to  American 
manufacturers  more  credit  reports  on  the  standing  of  houses  in 
foreign  markets  than  are  available  to  the  Manufacturers  of 
France,  Germany,  Great  Britain,  or  any  other  country.  Such  re- 
ports in  this  country  are  in  the  hands  of  commercial  reporting 
agencies,  of  many  associations  and  even  local  Chambers  of  Com- 
merce, are  supplied  to  its  advertising  clients  by  the  modern  ex- 
port trade  paper,  and  thousands  upon  thousands  of  them  have 
been  collected  by  international  bankers  having  headquarters  or 
branches  in  this  country. 

Invoices  and  Foreign  Bankers. — How  much  information  is 
likely  to  be  gathered  from  the  ordinary  manufacturer's  invoice 
as  it  passes  through  bankers'  hands  in  this  or  in  any  other  coun- 
try ?  It  may  be  possible  that  in  rare  instances  information  thus 
available  has  seemed  to  be  of  value  and  has  actually  been  trans- 
mitted to  our  competitors  in  Europe  by  branches  of  European 
banks  in  South  America.  Let  any  manufacturer,  however,  ask 
himself  of  what  value  even  an  exact  copy  of  his  ordinary  in- 
voice would  be  to  a  competitor  not  familiar  with  his  individual 
styles  or  numbers  or  qualities — that  is,  with  the  ordinary  descrip- 
tion of  his  goods  as  it  appears  on  an  invoice  without  reference  to 
catalogue  or  sample  collection.  In  any  event,  it  is  most  seriously 
to  be  doubted  if  the  mere  fact  that  such-and-such  an  American 
manufacturer  is  doing  business  with  Messrs.  So-and-So  in  a  cer- 
tain market  is  of  vital  importance  to  the  manufacturer's  com- 
petitor abroad,  or  could  not  be  learned  equally  as  well,  and  with 


44  PRACTICAL  EXPORTING 

a  mass  of  far  more  interesting  and  intimate  detail  (including 
samples  of  the  actual  goods),  from  the  local  agents  of  these 
competing  manufacturers  as  from  the  foreign  bankers  said  to  be 
addicted  to  "betraying"  American  interests.  A  competing  na- 
tion might  be  interested  in  learning  prices  at  which  American 
rapid-fire  field  guns  or  cartridges  are  supplied  to  the  Brazilian 
Government.  But  would  invoices  of  padlocks  or  shoes  interest 
the  manufacturers  of  another  country? 

Banking  Facilities. — American  shijjpers  have  always  enjoyed 
equally  as  many  and  as  good  facilities  for  disposing  of  their 
ordinary  foreign  drafts  in  the  New  York  market  as  European 
shippers  have  enjoyed  in  their  local  markets.  Foreign  exchange 
bankers  in  New  York  have  always  been  willing  to  take  any  prof- 
fered quantity  of  bills  on  any  market  of  the  world,  when  offered 
by  responsible  manufacturers  or  exporters,  and  have  taken  them 
at  entirely  satisfactory  rates  of  exchange.  It  is  true,  however, 
that  in  very  large  shipments,  say  shipments  of  $10,000,  $50,000, 
$100,000  at  a  time,  better  financial  facilities  have  been  available 
abroad,  have  indeed  actually  been  secured  abroad  by  American 
exporters,  than  were  available  in  New  York.  This  has  been  due 
to  the  lower  rates  of  interest  prevailing  in  Europe  and  to  the 
existence,  especially  in  London,  of  a  discount  market  which, 
until  late  years,  has  been  an  unknown  quantity  in  our  own 
country.  Ordinary  shippers,  those  whose  foreign  orders  amount 
to  $1,000  to  $2,000  or  something  of  that  sort,  have  been  unaf- 
fected by  such  conditions  and  probably  will  continue  unaffected, 
even  with  the  development  in  New  York  of  the  discount 
market  which  it  is  hoped  will  grow  with  financial  develop- 
ments under  the  Federal  Reserve  Act.  Such  a  discount  market 
will  be  highly  desirable  from  many  points  of  view,  but  its  opera- 
tions will  probably  for  some  time  be  chiefly  of  interest  and  value 
as  affecting  transactions  involving  large  amounts  of  money. 

"Dollar  Exchange." — Our  ambition  to  see  more  branches  of 
American  banks  established  in  foreign  commercial  centers  is  a 
laudable  one  from  every  point  of  view.  Our  trade,  however,  has 
never  suffered  from  the  lack  of  such  branches.  Moreover,  while 
New  York  will  certainly  take  its  place  as  one  of  the  great  inter- 
national exchange  centers  of  the  world,  yet  it  will  never  entirely 
supplant  London,  nor  is  it  likely  that  "dollar  exchange"  will 


SOME  MISTAKEN  IMPRESSIONS  45 

ever  wholly  replace  sterling  exchange.  That  result  is  neither  to 
be  sought  nor  hoped  for.  Londou  will  continue  a  great,  if  not 
the  greatest,  commercial  and  financial  center.  Sterling  cur- 
rency is  too  well  known  and  recognized  the  world  over.  The 
Germans  themselves,  in  spite  of  their  foreign  banks  and  their 
own  hope  to  carry  on  international  operations  so  far  as  possible 
in  marks  instead  of  pounds  sterling,  found  themselves  obliged  to 
continue  the  use  of  sterling  denominations  in  their  dealings  with 
Australia,  South  Africa,  China,  Japan,  the  British  and  Portu- 
guese Colonies  in  Africa  and  to  a  large  extent  in  Central  and 
South  America,  the  greater  part  of  such  German  export  business 
being  cleared  through  London,  where  all  German  banks  were 
forced  to  maintain  branches.  In  Egypt,  Turkey  and  generally 
throughout  the  Mediterranean,  the  Germans  emploj'ed  French 
currency.  Our  own  ambition  should  not  be  to  impose  dollar  ex- 
changes, or  the  dollar  symbol,  but  to  utilize  that  form  of  ex-  • 
change  which  is  cheapest  or  otherwise  thought  most  desirable 
by  our  customers  in  different  markets. 

German  Oversea  Banks. — English  foreign  banks  used  to  main- 
tain agencies  in  Hamburg  while  Colonial  and  other  oversea  banks 
were  represented  in  that  city  through  arrangements  with  local 
banks.  Thus,  German  exporters  used  English  bank  agencies  as 
well  as  the  facilities  offered  by  the  banks  of  their  own  nationality. 
A.  J.  Wolfe  in  his  report  to  the  Department  of  Commerce  on 
Foreign  Credits,  prior  to  the  European  War,  wrote  as  follows: 
"The  establishment  of  a  network  of  German  banks  oversea  has 
saved  to  Germany  a  considerable  portion  of  the  tribute  formerly 
paid  to  England  in  the  negotiation  of  foreign  bills.  London, 
however,  is  still  the  leading  center  of  financial  exchange,  and  in 
dealing  with  countries  like  South  Africa  and  Australia,  Germany 
still  must  look  to  London  for  mediation.  German  bankers  are 
compelled  to  maintain  banking  connections  and  branches  in  that 
all  important  financial  center. 

"In  certain  countries  they  have  no  banks  of  their  own  and 
some  of  their  competitors  are  provided  with  such  banks.  Never- 
theless the  Germans  are  doing  a  tremendous  business  there.  In 
Russia,  French  banks  maintain  branches  and  Germans  have  no 
banks  of  their  own.  Nevertheless,  they  are  far  from  being  ham- 
pered by  such  a  lack. 


46  PRACTICAL  EXPORTING 

"German  banks  were  not  created  originally  so  much  as  a 
means  for  better  credit  facilities  oversea  as  with  the  object  of 
participating-  in  the  financial  activities  of  the  countries  within 
their  territory. ' ' 

Referring  to  the  popular  impression  that  Germany  had  estab- 
lished and  operated  a  great  many  foreign  branches  of  German 
banks,  the  late  Charles  A.  Conant,  one  of  the  foremost  American 
authorities  and  authors  on  financial  problems,  wrote  (1914)  : 
"But  even  these  strenuous  and  unremitting  efforts  had  only 
raised  the  number  of  German  foreign  and  colonial  banks  three 
years  ago  to  thirteen,  according  to  the  eminent  German  scholar, 
Dr.  Riesser,  with  an  aggregate  capital  of  100,000,000  marks  and 
with  70  branches  as  compared  in  England  with  32  colonial  banks 
with  head  offices  in  London,  with  2,104  offices  outside  of  England, 
and  18  foreign  banks  with  175  offices." 

Chances  for  American  Banks  Abroad. — There  have  been  many 
opinions  as  to  the  chances  of  branches  of  American  banks  abroad 
to  become  profitable  or  even  self-supporting  institutions.  Under 
date  of  May  27,  1914,  at  the  first  National  Foreign  Trade  Con- 
vention held  in  Washington,  John  E.  Gardin,  then  Vice  Presi- 
dent of  the  National  City  Bank  of  New  York,  speaking  of  the 
business  of  American  banks  in  foreign  countries,  was  officially 
reported  as  making  the  following  observation:  "This  is  a  mat- 
ter which  will  have  to  be  given  attention  sooner  or  later,  but  at 
the  present  time  the  new  law  has  not  been  sufficiently  worked  out 
to  permit  American  capitalists  to  see  clearly  how  to  establish 
American  banks  abroad.  It  is  feared  that  they  will  be  a  losing 
factor  and  I  think  that  this  fear  seems  to  have  a  foundation  in 
fact."  Yet  within  three  weeks  of  this  declaration  the  bank  with 
which  the  speaker  was  connected  announced  its  intention  to  open 
branches  in  Brazil  and  the  Argentine  Republic.  Clearly  other 
considerations  than  possible  profits  or  losses  through  operations  in 
exchange  influenced  this  institution.  These  may  have  included, 
perhaps,  the  development  of  an  investment  market  in  the  United 
States  for  Latin  American  securities,  possibly  local  loans  of  pub- 
lic or  industrial  character,  all  directly  or  indirectly  likely  to  bene- 
fit our  commerce.  Our  stupendous  war  exports  inspired  or  at 
least  hastened  the  establishment  of  many  other  branches  of 
American  banks  in  various  countries.     The  more  we  have  the 


SOME  MISTAKEN  IMPRESSIONS  47 

better,  even  though  the  theory  and  spirit  back  of  them  are  as  yet 
totally  different  from  those  which  actuated  the  founding  of  the 
great  British  oversea  banks. 

Absence  of  Foreign  Banks  no  Handicap. — Practically  all 
competent  judges,  that  is,  men  of  considerable  experience  in  the 
export  trade,  agree  in  declaring  that  the  popular  or  newspaper 
statement  of  this  obstacle  in  the  path  of  the  extension  of  Ameri- 
can foreign  trade  is  unfounded.  Thus,  President  Alba  B.  John- 
son, of  the  Baldwin  Locomotive  Works,  in  a  carefully  written 
paper  presented  to  the  first  National  Foreign  Trade  Convention, 
observed:  "We  hear  much  of  the  need  of  American  banks  for 
extending  foreign  trade.  It  is  not  true  that  there  is  any  diffi- 
culty whatever  at  present  in  carrying  out  all  the  banking  opera- 
tions necessary  for  making  remittances,  establishing  credits,  etc., 
between  New  York  and  Central  and  South  American  countries. 
The  existing  banks  having  their  head  offices  in  London  and  their 
branches  in  New  York,  and  in  all  the  commercial  centers  of  Cen- 
tral and  South  America,  furnish  every  necessary  facility  for 
making  collections  and  remittances.  .  .  .  The  real  need  of  Amer- 
ican banks  abroad  is  to  furnish  experienced  representatives  of 
American  financial  interests,  capable  of  seeing  profitable  oppor- 
tunities for  the  investment  of  American  capital  and  held  in  such 
confidence  by  American  investors  that  when  opportunities  for 
profitable  investment  are  presented  they  will  be  taken  advantage 
of.  .  .  .  No  bank  can  exist  on  the  business  of  merely  making  col- 
lections. Banks  must  depend  for  their  profits  upon  using  the  de- 
posits of  the  community  in  which  they  are  situated. ' ' 

Howard  Ayres,  when  secretary  of  the  old  China  &  Japan  Trad- 
ing Company,  New  York,  which  was  one  of  the  prominent  and 
one  of  the  older  export  and  import  houses  of  the  United  States, 
writing  in  the  Journal  of  Commerce  declared:  "A  favorite  theme, 
especially  with  those  directly  interested  in  that  instrament  of 
trade  and  those  carried  away  by  the  exuberance  of  patriotism,  is 
the  American  bank,  the  need  of  it  in  foreign  countries,  and  the 
difficulty  of  trading  without  it.  It  will  be  a  good  thing,  of  course, 
for  all  business  men  to  have  more  bankers  seeking  commercial 
bills,  but  there  will  be  no  peculiar  advantage  to  any  one  to  have 
the  new  bankers  and  their  funds  of  even  nominal  origin  within 
the  United  States.     There  has  not  been  at  any  time  until  the 


48  PRACTICAL  EXPORTING 

present  any  lack  of  banking  capital  for  doing  export  or  import 
business  with  any  country  under  the  sun,  and  all  the  facilities 
of  existing  institutions  have  been,  and  will  be  again,  extended 
without  discrimination  as  to  nationality  to  all  business  men  in 
every  country  to  the  extent  of  their  credit. ' ' 

Foreign  Loans. — A  general  misunderstanding  is  prevalent  re- 
garding the  finance  required  by  some  foreign  countries,  par- 
ticularly the  republics  of  Latin  America.  Credits  required  by 
such  countries  are  not  merchandise  credits.  They  consist  of 
bond  issues  to  which  the  public  of  one  country  or  another,  where 
such  securities  are  offered,  is  invited  to  subscribe.  The  late 
Willard  Straight,  of  the  American  International  Corporation,  at 
one  time  connected  with  Messrs,  J.  P.  Morgan  &  Co.,  com- 
pared the  purchaser  on  credits  of  sixty  or  ninety  days,  or  per- 
haps six  months,  credits  carried  by  the  merchant  and  in  turn  by 
the  merchant's  bankers,  with  the  purchaser  who  desires  credit  for 
a  period  of  from  five  to  sixty  years.  "It  is  no  longer  an  ordinary 
banking  transaction;  it  becomes  necessary  for  him  to  obtain 
funds  by  the  sale,  on  the  market,  of  stocks  or  bonds  rather  than 
by  discounting  commercial  paper.  In  other  words,  the  pur- 
chaser, instead  of  obtaining  credit  from  the  merchant,  the 
manufacturer  or  the  banker,  through  the  banker  as  his  agent, 
borrows  from  the  investing  public.  Most  of  the  countries  which 
are  now  rapidly  developing  their  resources  and  which  cannot 
themselves  finance  such  development,  must  secure  money  in  this 
way.  If  we  expect  to  realize  the  full  possibilities  of  our  export 
trade,  we  must,  by  our  readiness  to  purchase  foreign  bond  issues, 
be  able  to  extend  to  foreign  purchasers  the  accommodation 
whicli  they  now  obtain  in  the  markets  of  our  competitors." 

Foreign  Private  Company  Shares. — But  the  foreign  and 
especially  the  Latin  American  securities  that  have  been  floated 
by  banking  interests  among  European  investors  are  by  no  means 
all  of  them  in  the  nature  of  Government  bonds.  Possibly  far 
greater  effective  commercial  influence  has  been  exercised  by  the 
investments  of  European  capital  in  private,  industrial  or  rail- 
way companies  in  foreign  countries.  These,  it  is  clear,  are  en- 
tirely different  propositions  from  the  Government  or  Municipal 
securities  which  up  to  the  present,  at  any  rate,  have  been  those 


SOME  MISTAKEX  IMPRESSIONS  49 

almost  exclusively  referred  to  when  this  topic  has  been  on  the 
carpet  for  discussion. 

Referring-  to  the  fact  that  the  United  States  was  until  recently 
a  borrowing-  nation,  Mr.  Straight,  speaking  before  the  outbreak 
of  war,  explained  how  we  may  even  in  such  condition  still  have 
funds  to  invest  in  foreign  securities.  "You  know  that  a  mer- 
chant is  continually  borrowing-  from  his  bank  to  carry  on  his 
business.  Each  year  he  lays  aside  a  certain  amount  of  his  own 
savings  which  he  invests  as  he  sees  fit — sometimes  in  his  busi- 
ness, but  many  times  in  something  else.  The  United  States 
and  Germany  are  in  very  much  the  same  position.  The  Ger- 
man manufacturers  are  continually  getting  accommodation  in 
London,  but  their  savings  they  often  invest  in  loans  handled  by 
German  banks,  which  are  beneficial  to  German  industry.  I 
don't  see  why  we  cannot  do  the  same  thing.  We  are  still  a 
borrowing  nation  but  our  credit  is  good.  We  can  get  money 
in  Europe  for  our  railway  development  and  for  the  development 
of  this  country  and  our  industry.  Of  course,  utilize  our  money 
for  this  purpose ;  but  there  is  always  a  certain  surplus  which 
could  come  back  into  the  development  of  our  own  industry  by 
financing  these  foreign  loans." 

AMERICAN  SHIPS 

For  thirty  or  forty  years  the  American  public  has  been  per- 
sistently and  continuously  urged  "to  do  something"  for  the 
merchant  marine  of  the  United  States.  Frequently  it  has  been 
asserted  that  the  lack  of  American  ships  to  carry  American 
goods  abroad  has  been  a  serious  handicap  to  the  expansion  of 
our  foreign  commerce,  and  speakers  sometimes  have  even  cried 
that  it  was  impossible  for  our  export  trade  "to  grow"  unless  we 
had  ships  under  our  own  flag.  Such  speakers  may  respectfully 
be  referred  to  the  astounding  figures  of  the  actual  growth  of 
our  export  trade  during- the  fifteen  years  of  "normal"  trade 
preceding  the  war.  Their  impassioned  appeals  on  this  score 
may,  therefore,  be  dismissed  for  what  they  are  worth. 

There  have  even  been  some  enthusiasts  found  to  repeat  what 
they  have  never  attempted  to  prove,  that  foreign  shipowners  dis- 
criminate against  American  shippers  in  freight  rates.     Twenty 


50  PRACTICAL  EXPORTING 

years  ago  the  extraordinary  claim  was  first  made  that  we  pay 
millions  of  dollars  a  year  to  European  shipowners  in  freights  on 
American  goods  which  we  ought  to  keep  in  this  country,  through 
paying  these  colossal  sums  to  American  ships. 

Complaints  not  Justified. — Not  one  of  these  statements  is  jus- 
tified, their  popular  currency  and  constant  reiteration  from  the 
platform  and  in  the  press  to  the  contrary  notwithstanding. 
Large  and  experienced  shippers  are  practically  a  unit  in  con- 
demning them  as  largely  the  vaporings  of  theorists.^  Criticism 
on  the  part  of  actual  shippers  almost  invariably  comes  from 
those  of  slight  experience  and  proves  on  investigation  to  be 
based  on  lack  of  knowledge  or  misapprehension  of  facts.  Most 
of  it  is  aimed  at  our  communications  with  South  America,  pos- 
sibly because  so  many  writers  apparently  forget  that  we  have 
any  export  trade  with  other  parts  of  the  world. 

1  "We  hear  much  of  the  need  of  American  steamship  lines.  Of  course 
there  would  be  an  economic  advantage  to  us  as  a  nation  in  expending  at 
home  the  sums  paid  to  Europe  for  sea  transportation,  but  I  regard  this, 
from  the  shipper's  standpoint,  as  comparatively  imimportant  and  senti- 
mental. It  is  a  fact  that  the  American  steamship  lines  operating  Amer- 
ican and  foreign  ships  to  West  Coast  ports,  and  the  foreign  steamship 
lines  operating  to  East  Coast  ports  (i.e.,  of  South  America),  furnish  by 
weekly  sailings  all  the  facilities  at  present  necessary  for  the  trade,  and 
under  the  ordinary  laws  of  supply  and  demand,  such  facilities  will  be 
increased  as  the  business  increases.  Whilst  I  have  heard  of  cases  of  dis- 
crimination against  American  shippers  by  the  European  steamship  lines, 
so  far  as  my  own  experience  goes,  I  have  been  satisfied  that  the  freight 
rates  charged  to  American  shippers  are  as  favorable  in  general  as  those 
charged  to  European  shippers  of  similar  commodities.  The  need  of  Amer- 
ican steamship  lines  does  not,  therefore,  stand  in  the  way  of  the  exten- 
sion of  American  trade.  The  American  flag  has  been  banished  from  the 
seas  by  unwise  regulation  of  American  ships."  (Alba  B.  Johnson,  Presi- 
dent, Baldwin  Locomotive  Works.) 

"In  our  shipping  regulations  we  have  attempted  to  coerce  economic 
laws  with  the  result  of  driving  our  ships  oflF  the  high  seas,  and  our  states- 
men have  no  remedy  to  suggest  except  new  laws  of  the  same  general  ef- 
fect. Should  we  put  our  shipowners  on  an  equality  with  those  of  other 
nations,  and  let  them  alone,  the  flag  will  quickly  reappear.  Meanwhile, 
shippers  of  goods  have  had  abundant  freight  room  for  any  part  of  the 
world  and  have  suffered  no  hardship  whatever  from  having  to  use  foreign 
vessels.  The  payment  of  freiglit  money  to  foreign  shipowners  is  not  a 
tribute,  as  the  more  violent  assert,  but  an  item  of  ultimate  cost  that  is 
recovered  in  every  instance  from  the  buyers  in  foreign  markets,  to  whom- 
soever paid.  That  its  payment  to  shipowners  here  might  be  desirable  is 
an  incidental  feature  only."  (Howard  Ayres,  Secretary  China- Japan  Trad- 
ing Co.,  in  New  York  Journal  of  Commerce.) 


SOME  MISTAKEN  IMPRESSIONS  51 

However  little  justification  there  may  have  been  in  the  past 
for  complaints  of  a  lack  of  American  ships  in  which  to  transport 
American  goods  to  foreign  markets,  certainly  in  the  future  the 
solution  of  the  problem  will  lie  entirely  in  the  hands  of  the 
American  people.  It  is  certain  that  since  the  return  of 
peace  to  the  world  the  United  States  appear  as  owners  of  a 
great  fleet  of  merchant  vessels.  Whether  they  shall  be  operated 
by  the  Government,  or  be  sold  or  chartered  by  it  to  private  in- 
terests, it  will  almost  surely  develop  that  one  of  two  courses  will 
have  to  be  adopted  to  enable  these  American  merchant  vessels 
to  compete  with  ships  of  other  nations  in  the  carrying  trade  not 
only  of  our  own  country  but  of  the  world :  subsidies,  or  assist- 
ance in  one  shape  or  another,  must  be  granted,  or  obnoxious 
shipping  laws  must  be  repealed  or  so  modified  as  to  enable  our 
vessels  to  be  operated  on  an  equal  basis  of  costs  with  vessels  fly- 
ing foreign  flags.  Enterprise  among  American  shipping  agents 
has  never  been  dead.  Their  patriotism  is  equal  to  any  ordinary 
strain,  but  it  never  did  and  never  will  extend  to  the  point  of 
operating  vessels  under  the  American  flag  at  a  loss  to  themselves 
when  they  might  operate  vessels  registered  in  other  countries  at 
a  profit.  When  the  people  of  the  United  States,  particularly 
manufacturers  and  merchants  engaged  in  the  overseas  trade, 
wake  up  to  the  fact  that  like  any  other  business  the  shipping 
business  must  be  profitable  if  it  is  to  live,  and  when  the  Congress 
similarly  recognizes  cold  business  facts,  then,  and  not  until  then, 
will  our  American  merchant  marine  become  a  notable  and  perma- 
nent acquisition  to  our  resources. 

Freight  Tribute  to  Foreign  Ships. — Our  friends  who  work 
over-time  the  old  cry  of  an  American  tribute  to  foreign  ship- 
owners of  scores  of  millions  of  dollars  every  year  in  the  freight 
paid  on  American  goods  shipped  to  the  four  quarters  of  the 
globe,  seem  not  to  understand  the  entirely  obvious  fact  that  it  is 
never  the  shipper  who  pays  the  freight.  Our  customers  pay  it, 
and  if  we  had  10,000  big  American  steamers  ^  these  foreign  cus- 

1  According  to  P.  A.  S.  Franklin,  President  of  the  International  Mercan- 
tile Marine  Company,  writing  before  submarine  piracy  was  dreamed  of, 
"The  oversea  commerce  of  tlie  world  is  conducted  by  over  2.5,000  steam- 
ers having  a  gross  tonnage  of  43,0.54,000  tons,  which  are  owned  by  approxi- 
mately 4,200  dilTercnt  firms  and  companies.  Of  this  great  body  of  ton- 
nage  only    about    1,555    steamers,    owned   by   approximately    108    different 


52  PRACTICAL  EXPOBTINO 

tomers  of  American  manufacturers  might  still  prefer  to  give 
us  positive  instructions  to  ship  by  foreign,  not  by  American 
boats.  We  should  be  bound  by  the  instructions  of  our  cus- 
tomers and  their  patriotic  impulses  might  influence  them,-  just 
as  some  people  seem  to  expect  ours  would  influence  us.  In  any 
case,  they,  our  customers,  pay  freights  on  American  goods— we 
do  not  pay  them.  The  routes  which  goods  are  to  take  will,  how- 
ever, never  be  influenced  by  purely  patriotic  feelings.  It  will 
always  be  a  question  of  freight  rates,  or  of  general  ex- 
pediency, which  will  govern  buyers  of  American  goods,  in  giving 
shipping  instructions  to  American  exporters.  In  this  regard 
it  may,  to  say  the  least,  be  entirely  doubtful  if  ships  under  the 
American  flag  will  be  able  to  offer  lower  rates  of  freight  than 
can  foreign  vessels. 

No  Discrimination  Against  American  Shipments. — So  far  as 
discrimination  in  rates  against  American  shippers  is  concerned, 
it  may  be  pointed  out  that  the  self-confessed  and  advertised 
purpose  of  steamship  conferences  was  to  equalize  rates,  to  make 
rates  on  similar  goods  to  the  same  destinations  the  same,  whether 
quoted  in  New  York,  in  Liverpool  or  in  Hamburg.^  Americans 
are  not  by  any  means  the  only  ones  who  complain  of  discrimina- 
tion. For  example,  the  Manchester  (England)  Association  of 
Importers  and  Exporters  made  repeated  complaints  to  the  Brit- 
ish Board  of  Trade  and  to  British  shipowners  claiming  that 
lower  rates  of  sea  freights  have  been  charged  from  Continental 
ports  than  from  British  ports,  and  it  has  objected  to  what  seems 
to  be  a  handicap  to  British  trade  in  the  fact  that  machinery 
shipped  from  New  York  to  Rangoon,  via  Liverpool,  is  carried 
on  the  through  journey  at  precisely  the  same  rate  of  freight  as 
English  shipj)ers  have  to  pay  from  Liverpool  to  Rangoon.     The 

companies,  are  engaged  in  regular  line  service  in  the  oversea  trades.  The 
remainder  consists  of  tlie  great  mass  of  free  tramp  tonnage,  operating  en- 
tirely under  the  law  of  supply  and  demand  and  regulating  the  ocean  freight 
rates  for  everybody  by  the  charges  which  they  fix  for  the  transportation 
of  the  great  mass  of  the  world's  staple  products." 

1  For  a  full  examination  of  the  problem  of  shipping  rings,  or  "confer- 
ences," the  reader  is  referred  to  tlie  Proceedings  and  "Report  of  the  Com- 
mittee of  the  House  of  Representatives  on  the  Merchant  IMarine  and  Fish- 
eries engaged  in  the  investigation  of  shipping  combinations,  4  volumes, 
Washington,  1913-14. 


SOME  MISTAKEN  IMPRESSIONS  53 

equalization  of  freight  rates  by  the  steamship  conferences  thus 
works  to  American  advantage  in  some  cases,  although  it  un- 
doubtedly works  to  our  disadvantage  in  others.  There  is,  how- 
ever, absolutely  no  basis  for  any  claim  of  discrimination  against 
us  on  the  part  of  shipowners  of  any  nationality.  ^lerchant  ships 
in  times  of  peace  are  not  and  should  not  be  owned  by  Govern- 
ments. They  are  operated  by  private  companies  for  the  ex- 
press and  sole  purpose  of  returning  dividends  on  the  capital  in- 
vested. Shipowners  of  any  nationality  are  not  on  this  account 
alone  likely  to  take  any  measures  regarded  as  apt  to  restrict 
American  patronage  ,  and  trade.  Few  definite  assertions  that 
discrimination  has  existed  stand  close  analysis  and  investiga- 
tion. IMost  of  them  are  advanced  in  ignorance  or  mistake  as  to 
facts.  Moreover,  critics  who  emphasize  "discrimination"  sel- 
dom attempt  to  adduce  specific  examples  &f  proof. 

COMBINATIONS  TO  GET  EXPORT  TRADE 

Prompted  by  a  desire  to  secure  modifications,  as  applying  to 
the  export  trade,  of  certain  provisions  of  United  States  laws  of 
doubtful  interpretation  in  that  regard,  there  developed  a  very 
earnest  agitation  to  gain  legal  authority  or  permission  to  make 
combinations  for  export  trade,  whatever  restrictions  the  Sher- 
man Act  or  other  laws  may  impose  on  business  within  our  own 
boundaries.  Bound  up  in  the  arguments  advanced  there  was 
too  generally  and  widely  advertised  a  good  deal  of  entirely 
gratuitous  sympathy  for  the  "small"  manufacturer  who  wants 
to  enlarge  his  business  by  adding  an  export  trade.  That  sympa- 
thy was  entirely  misplaced ;  the  small  manufacturer  does  not  re- 
quire or  demand  it,  but  so  far  as  can  be  observed  has  been  get- 
ting along  pretty  well  and  doing  nicely  all  by  himself.  Presi- 
dent Wilson  in  addressing  the  Chamber  of  Commerce  of  the 
United  States  in  February,  1915,  said  that  it  had  "many  times" 
been  brought  to  his  attention  that  "our  anti-trust  laws  are 
thought  by  some  to  make  it  illegal  for  merchants  in  the 
United  States  to  form  combinations  for  the  purpose  of  strength- 
ening themselves  in  taking  advantage  of  the  opportunities  of 
foreign  trade."  And  he  went  on  to  refer  to  great  corporations 
with  abundant  resources  and  the  consequent  facilities  they  en- 


54  PRACTICAL  EXPORTING 

joyed  in  foreign  markets  "which  the  smaller  man  cannot  af- 
ford." This  was  made  a  feature  of  discussions  at  several  ex- 
port conventions. 

It  was  contended  that  the  intent  of  laws  designed  to  prohibit 
combinations  in  restraint  of  trade,  or  to  fix  prices,  ought  not  to 
be  construed  as  forbidding  combination  efforts  to  promote  and 
develop  trade  in  other  countries.  Legal  certainty  was  sought  on 
this  point.  We  were  reminded  that  when  business  leaps  the 
boundaries  of  our  country  it  immediately  encounters  the  compe- 
tition of  foreign  business  unhampered  by  laws  in  any  degree 
analogous  to  ours.  But,  advantageous  as  they  may  seem  and 
be  to  many  manufacturers  or  shippers  of  staples  or  rough  goods, 
it  seems  doubtful,  to  say  the  least,  if  combinations  or  the  right 
to  enter  combinations  will  be  welcomed,  if  indeed  regarded 
as  desirable,  by  ordinary  makers  of  specialities  and  patented 
articles,  which  are  the  products  of  by  far  the  greater  number  of 
American  concerns  interested  or  likely  to  become  interested  in 
our  export  trade. 

Who  Would  Benefit  from  Combinations? — Franklin  John- 
ston, publisher  of  the  American  Exporter,  considered  the  (jues- 
tion  in  an  address  at  the  meeting  of  the  American  Academy  of 
Political  Science  in  May,  1915,  in  which  he  said : 

"The  right  to  combine  to  fix  prices  for  export  trade  is  a 
matter  which  does  not  interest  the  average  manufacturer  of 
articles  of  a  highly  specialized  nature  such  as  engines,  machin- 
ery, typewriters,  shoes,  sewing  machines,  haberdashery,  auto- 
mobiles, bicycles  and  scores  of  other  lines.  To  such  trades 
'anti-trust'  laws  seldom  apply,  and  the  advantages  to  be  derived 
from  joint  export  organizations  hardly  outweigh  the  difficulties 
to  be  overcome  in  forming  them.  In  such  lines  intelligent  in- 
dividual effort  will  usually  accomplish  better  and  quicker  re- 
sults than  cooperative  ones. 

"Inadvertently,  much  of  the  discussion  on  this  topic  has  given 
an  entirely  erroneous  impression  as  to  the  difficulties  'small' 
manufacturers  have  to  contend  with  in  establishing  an  export 
business.  Small  manufacturers,  except  in  certain  lines,  have 
never  felt  the  need  of  combining  to  fix  prices  or  establish  joint 
selling  agencies,  and  it  would  not  be  profitable  for  them  to  do  so. 


SOME  3IISTAEEN  IMPRESSIONS  55 

Nor  are  they  faced  with  any  difficulties  which  involve  large 
expenditures  of  money. 

"That,  however,  joint  selling  agencies  for  export,  or,  indeed, 
export  'pools,'  would  have  economic  advantages  in  staple  lines, 
such  as  steel,  nails,  copper,  cement,  cheap  paper,  cotton  piece- 
goods,  cordage,  etc.,  can  hardly  be  denied. 

"The  national  advantages  of  combinations  in  export  trade 
would  be  derived  through  the  added  strength  given  large  Ameri- 
can corporations  in  competing  with  similar  foreign  units  abroad, 
and  not  because  industries  in  which  'trusts'  are  not  typical  re- 
quire, or  would  take  advantage  of,  permission  to  combine.  The 
subject  has,  therefore,  an  academic  interest  only,  for  the  aver- 
age manufacturer  of  specialties.^ 

"Moreover,  while  in  certain  trades  one  or  two  manufacturers 
have  their  own  foreign  branches,  their  competitors  also  do  a 
large  export  business.  For  instance,  one  American  typewriter 
company  has  its  own  retail  branch  in  Buenos  Aires.  Other 
American  typewriters  are  equally  as  well  known  in  the  Argen- 
tine market,  although  their  distribution  is  done  by  local  dealers. 
A  famous  sewing  machine  company  has  its  own  retail  branches 
not  only  in  Buenos  Aires,  but,  seemingly,  in  every  town  of  even 
slight  importance  throughout  Latin  America.  Yet,  other 
American  sewing  machine  companies  do  a  large  business  in  the 
same  markets." 

Small  Manufacturers  as  Exporters. — As  bearing  on  the  pos- 
sibilit.y  of  the  "small"  manufacturer's  ability  to  get  and  to 
build  up  a  profitable  export  trade,  figures  compiled  by  the  pub- 
lishers of  the  American  Exporter  in  May,  1915,  are  of  interest. 
Out  of  approximately  600  advertisers  in  the  paper  in  question, 
whose  ratings  were  taken  from  one  of  the  standard  commercial 
agency  books,  it  was  found  that  112  are  rated  at  $1,000,000  or 
over,  226  are  rated  as  having  from  $100,000  to  $500,000,  161 

1  This  point  of  view  was  adopted  by  a  representative  of  our  large  busi- 
ness interests,  J.  Ogden  Armour,  of  Armour  &  Company,  Chicago,  in  an 
address  arguing  for  "Syndicate  Export  Marketing"  delivered  before  the 
Federal  Trade  Commission  at  its  sessions  in  Chicago,  midsummer  1915. 
"The  method  might  not  work  to  advantage  on  advertised  trade  mark  goods 
or  where  large  selling  organizations  have  already  developed  an  efficient 
distribution  for  their  output.  Each  industry  would  have  its  own  prob- 
lems." 


56  PRACTICAL  EXPORTING 

were  rated  at  from  $20,000  to  $75,000,  while  99  were  rated  at 
$10,000  and  less.  The  latter  category  included  a  number  not 
rated  by  the  agency  in  question — a  blank  rating,  of  course,  not 
always  indicating  lack  of  capital,  and  in  this  instance  the  class 
now  in  question  included  a  large  number  who  have  been  adver- 
tising for  foreign  trade  for  many  years  and  who  meet  their  ad- 
vertising bills,  at  least,  with  satisfactory  promptness.  We  thus 
have  a  total  of  338  advertisers  in  the  American  Exporter  who 
may  be  called  large  companies,  that  is,  with  capital  ratings 
ranging  from  $100,000  up  to  $1,000,000  or  more.  Contrasted 
with  which  we  find  260  concerns  which  may  perhaps  be  classed 
as  small,  being  rated  at  from  $75,000  down  to  $1,000  or  "blank." 
A  little  more  than  one-half  of  these  concerns  which  manifest 
their  desire  to  do  foreign  business  by  advertising  for  it  are  thus 
found  to  be  "large,"  and  a  little  less  than  half  of  these  Ameri- 
can manufacturers  who  are  thus  developing  export  business  are 
"small." 

Comparative  Export  Success  of  "Small"  Manufacturers. — 
Even  a  cursory  examination  of  the  official  statistics  of  American 
export  trade  is  sufficient  to  demonstrate  the  important  position 
in  that  trade  of  that  class  of  manufacturers  that  may  be  called 
"small."  Look  over  the  figures  for  the  fiscal  year  ending  June 
30,  1914,  before  war  requirements  affected  the  character  of  our 
exports.  Beginning  near  the  top  of  the  list  we  may  consider 
our  exports  of  "Agricultural  Implements."  Shipments  of 
"mowers  and  reapers"  amounting  to  over  $18,000,000  in  1914 
are  to  be  credited  to  one  great  company  and  three  or  four  com- 
petitors who  may  also  be  called  "large"  manufacturers.  But 
there  were  also  exported  in  1914  nearly  as  large  a  value  (about 
'$16,000,000)  of  other  agricultural  implements  which  were  the 
products  of  concerns  comparatively  to  be  called  "small" — 
makers  of  plows  and  cultivators,  planters  and  seeders,  incu- 
bators, windmills,  hay  rakes  and  tedders,  threshers,  wheelbar- 
rows and  cream  separators. 

Steel  rails  ($10,000,000  worth  of  them  were  exported  in  1914) 
are  made  and  shipped  by  big  companies.  Products  worth  twice 
as  much  money  were  exported  in  1914  by  small  manufacturers 
of  locks,  hinges,  axes,  hammers  and  hatchets,  scales  and  balances, 
saws,  shovels,  general  tools  and  stoves  and  ranges.     Large  com- 


SOME  MISTAKEN  IMPRESSIONS  57 

panies,  few  in  number,  export  $3,690,000  worth  of  steam  locomo- 
tives; small  makers,  scores  of  them,  export  gasoline  engines  of 
all  sorts  worth  almost  twice  as  much  ($7,100,000).  One  big  con- 
cern alone  is  virtually  responsible  for  exports  of  $1,500,000 
worth  of  shoe  machinery ;  a  crowd  of  small  makers  of  marine 
gasoline  engines  ship  a  slightly  larger  value  of  their  specialty. 

One  big  company  is  chiefly  responsible  for  exports  of  $780,000 
worth  of  photographic  goods;  dozens  of  small  manufacturers 
each  get  a  share  in  shipments  of  toys  worth  much  more,  or 
athletic  and  sporting  goods  of  greater  value.  Compare  ship- 
ments of  soap  and  perfumery,  made  by  ''small"  people,  com- 
paratively, $6,500,000  in  1914,  with  cigarettes,  $4,700,000,  made 
by  a  big  company.  Contrast  exports  of  small  makers  of  furni- 
ture, $6,500,000,  with  exported  products  of  large  manufacturers 
of  talking  machines,  $2,500,000,  or  cash  registers,  $4,800,000. 

Small  makers  of  carriages  and  wagons  account  for  $1,600,000 
in  our  export  trade  totals ;  big  makers  of  elevators  for  only 
$1,300,000.  Large  shippers  of  news  print  paper  get  $2,100,000 
of  trade  abroad ;  small  people  making  typewriter  ribbons,  car- 
bon paper,  mucilage,  fountain  pens,  steel  pens,  writing  ink, 
penholders  and  lead  pencils  get  $2,000,000.  Exports  of  iron 
pipe  and  structural  steel  ($26,000,000)  are  controlled  chiefly  by 
very  large  concerns;  small  concerns  ship  almost  identically  the 
same  value  of  upper  leather,  glazed  kid,  etc.,  for  shoe  making, 
and  another  lot  of  small  manufacturers,  the  boot  and  shoe 
makers,  contribute  $18,000,000  more  to  our  export  totals. 

We  need  both  sorts,  the  big  manufacturer  and  the  small, — but 
what  justification  is  there  for  any  claim  that  the  little  fellow 
cannot  get  any  export  business?  The  foregoing  is  a  picture  of 
our  export  trade  in  normal  times  of  peace.  If  so  before  the 
war,  why  not  likely  to  continue  so  after  the  war? 

Combinations  of  Manufacturers  Authorized. — Congress  was 
undoubtedly  fully  justified  in  passing  the  so-called  Webb-Pom- 
erene  Act  authorizing  combinations  of  manufacturers  for  the 
development  of  export  trade.  It  is  by  no  means  inconceivable 
that  such  combinations  may  facilitate  the  operations  of  some 
large  corporations,  increase  their  own  trade  and  hence  the  pros- 
perity of  the  whole  country,  but  serious  objection  is  to  be  made 
to  the  assertions  that  small  manufacturers  require  such  com- 


58  PRACTICAL  EXPORTING 

binations  in  order  to  develop  foreign  trade  or  that  they  could  or 
would  take  advantage  of  such  a  facility  were  they  legally 
granted  the  opportunity.  It  is  not  expensive  for  any  manufac- 
turer to  build  up  a  profitable  demand  for  his  goods  in  attractive 
foreign  markets;  in  fact,  he  usually  does  it  more  cheaply  than 
at  home  and  makes  a  better  profit  in  doing  it. 

Various  forms  of  possible  combination  efforts  will  be  dis- 
cussed under  another  heading.  Meanwhile,  it  may  here  further 
be  observed  that  the  thought  back  of  the  agitation  in  this  regard 
seems  to  be  only  of  the  establishment  of  manufacturers'  or  a 
combination's  warehouses  in  foreign  markets.  The  trade  of  no 
country  is  dependent  now,  nor  has  it  ever  been  dependent  on 
enterprises  of  this  nature.  In  fact,  the  history  of  combinations 
of  one  sort  or  another  which  have  been  tried  on  sundry  occasions 
during  the  past  forty  or  fifty  years  is  distinctly  discouraging. 
Perhaps  not  more  than  two  "combination"  efforts  of  American 
manufacturers  in  a  foreign  warehouse  scheme  can  be  instanced 
as  a  success;  one  of  them  in  only  one  of  several  markets  where 
it  attempted  to  establish  itself.  We  have  had  various  forms  of 
combination  salesmen  and  other  enterprises,  including  at  least 
two  "American  Expositions."  Most  such  salesmen,  both  of 
the  others,  have  been  failures. 

What  seem  really  to  be  demanded  are:  more  generous,  inti- 
mate and  general  conferences  and  consultations  among  ex- 
porters, a  more  thorough  study,  a  broader  education  and  more 
scientific  development  of  export  fields.  For  example,  there  is 
probably  a  real  problem  presented  to  makers  of  what  are  some- 
times called  "short  lines,"  that  is,  manufacturers  who  make 
only  a  few  special  articles  out  of  many  belonging  to  the  same 
branch.  Such  manufacturers  must  usually  confine  themselves 
to  the  very  largest  buyers  only  in  a  few  foreign  markets.  To 
reach  the  general  trade  or  even  to  reach  any  trade  in  some  coun- 
tries, they  might  advantageously  work  with  makers  of  other 
allied  specialties  in  order  to  make  it  worth  the  while  of  such 
buyers  to  place  any  orders  at  all.  This  might  apply,  for  ex- 
ample, to  a  manufacturer  who  makes  nothing  but  electric 
switches,  or  a  packer  who  produces  nothing  but  canned  oysters. 

Mail  Order  Ideas. — However,  a  good  deal  of  the  discussion  in 
the  present  regard  seems  to  be  aimed  at  the  idea  of  distributing 


SOME  MISTAKEN  IMPRESSIONS  59 

merchandise  directly  to  the  ultimate  consumer,  as  has  been  done 
by  the  Standard  Oil  Company,  for  instance,  in  China,  in  Turkey 
and  in  many  other  countries.  It  may  with  propriety  be  doubted 
whether  similar  methods  are  amy  more  suitable  for  most  Amer- 
ican manufacturers  in  foreign  markets  than  they  are  in  the 
United  States  themselves.  We  have  developed  the  "mail  or- 
der" business  and  to  an  unprecedented  degree.  Houses  doing 
this  sort  of  business  here  at  home  already  do  something  of  the 
same  sort  in  some  foreign  fields,  but  certainly  the  time  has  not 
yet  arrived  when  the  ordinary  manufacturer  believes  it  a  de- 
sirable policy  on  his  own  part  to  follow  this  system,  nor  has  it 
been  done  by  our  competing  manufacturers  of  Europe.  While 
what  the  English  call  the  "multiple  shop"  system,  which  they 
long  ago  developed  to  a  considerable  extent,  has  of  late  years 
been  growing  in  our  own  country,  yet  the  number  of  our  manu- 
facturers who  have  themselves  embarked  in  the  retail  trade 
through  the  opening  of  their  own  shops  for  the  distribution  pri- 
marily of  some  of  their  own  products  is  limited  indeed.  Apart 
from  specialties,  it  may  be  said  to  be  chiefly  noticeable  in  the 
shoe  trade,  and  in  that  trade  the  same  companies  which  operate 
their  own  shops  in  the  United  States  have  also  established  shops 
in  other  lands.  AVhatever  this  tendency  may  indicate,  there 
seems  no  present  advantage  or  necessity  in  urging  the  adoption 
by  American  manufacturers  of  different  policies  in  other  coun- 
tries than  those  adopted  at  home. 

The  question  in  export  trade  is  always  a  puzzling  one — how 
far  to  cultivate  small  buyers.  Is  it  worth  while  drumming  the 
little  fellows,  the  small  establishments  in  villages  of  4,000  or 
5,000  people,  or  shall  such  trade  preferably  be  left  to  the  atten- 
tion of  distributors  at  important  commercial  centers  ?  The  prin- 
ciple usually  adopted  by  American  manufacturers  and  exporters 
is  precisely  the  same  as  that  followed  by  British  and  most  other 
European  shippers,  namely,  in  favor  of  the  large  general  dis- 
tributor. The  quite  modern  demand  for  the  establishment  of 
direct  relations,  for  the  cutting  out  of  middlemen,  seems  more 
frequently  than  not  to  preach  a  mistaken  policy  because  it  is 
apt  to  be  carried  too  far  down  the  line.  Especially  in  the  ex- 
port trade  is  it  of  doubtful  advantage,  not  only  because  of  the 
immensity  of  the  field  to  be  covered,  but  because  certain  features 


60  PRACTICAL  EXPORTING 

of  foreign  shipping  automatically  increase  the  cost  of  goods  and 
the  cost  of  doing  business,  as,  for  example,  the  higher  pro  rata 
freight  charges  on  small  shipments  and  the  unsatisfactory  as 
well  as  costly  means  of  financing  such  shipments.  When  Amer- 
ican manufacturers  have  succeeded  in  adequately  introducing 
their  wares  with  the  most  desirable  connections  in  all  the  prin- 
cipal distributing  centers  of  every  possible  or  desirable  foreign 
market,  then  their  most  sanguine  aspirations  are  likely  to  remain 
satisfied  for  many  years  thereafter. 

ADAPTING  GOODS  TO  MARKET  REQUIREMENTS 

Critics  of  American  export  practices  are  rare  who  do  not 
berate  us  for  what  they  declare  is  our  custom  of  trying  to  force 
on  foreign  buyers  what  we  think  they  ought  to  have  instead  of 
meeting  their  wishes  and  making  the  goods  they  want.  Unde- 
niably this  criticism  is  justified  in  all  too  many  instances.  It 
may  be  noted,  however,  that  identically  the  same  criticism  is 
made  of  manufacturers  of  Great  Britain  and  of  other  countries. 
A  writer  in  a  prominent  British  hardware  trade  paper  in  a 
discussion  of  the  vogue  of  American  saws  in  Great  Britain,  de- 
claring that  he  had  not  long  before  returned  from  a  trip  abroad 
in  the  course  of  which  he  collected  a  number  of  samples  of  de- 
sirable foreign  carpenter's  tools  for  the  purpose  of  submitting 
them  to  British  manufacturers  to  stem  if  possible  the  invasion 
of  American  tools  by  copying  or  improving  upon  the  samples 
collected,  wrote  that  he  regretted  "to  say  that  a  haughty  and 
cynical  spirit  seems  to  be  shown  by  many  to  new  and  progres- 
sive ideas."  In  a  speech  at  the  annual  meeting  of  the  African 
Banking  Corporation  in  London  it  was  observed:  "The  Amer- 
ican does  many  things  that  the  British  manufacturer  leaves  un- 
done."  The  South  African  correspondent  of  a  British  trade 
paper  writes  that  the  customary  reply  of  British  manufacturers 
when  asked  to  do  special  things  is,  "  'We  have  been  doing  this 
for  fifty  years  and  we  do  not  care  to  alter.'  That  is  why  in 
many  cases  British  manufacturers  are  fifty  years  behind  the 
times." 

Independence  of  American  Manufacturers. — However,  jus- 
tified as  it  undoubtedly  is  in  many  cases,  a  large  part  of  the 
criticism  aimed  at  our  manufacturers  is  unintelligent  because 


SOME  MISTAKEN  I3IPRESSI0NS  61 

it  does  not  take  into  consideration  our  systems  in  manufacturing, 
with  the  consequent  limitation  of  our  abilities  to  make  changes. 
Perhaps  the  question  of  extra  price  necessitated  for  special 
goods  is  at  the  bottom  of  this  whole  question.  It  is  almost  cer- 
tain that  most  manufacturers  would  willingly  produce  anything 
that  anybody  might  demand  if  an  appropriate  price  were  paid 
for  it. 

Quantity  production  of  standard  goods  is  one  of  the  dis- 
tinguishing characteristics  of  American  factories.  Specializa- 
tion is  another.  Loss  of  time  is  added  to  other  expense  in  al- 
most every  case  where  serious  changes  from  a  factory's  estab- 
lished products  are  demanded.  Will  buyers  pay  more  for  spe- 
cial goods?  There's  usually  the  rub.  An  American  consul 
complains  that  certain  popular  cheap  automobiles  are  always 
painted  black  and  are  not  so  highly  varnished  as  are  more  ex- 
pensive cars  of  European  origin.  Apparently  he  forgets  that 
the  cars  in  question  are  turned  out  of  the  factory  at  the  rate  of 
one  every  minute  or  two,  and  in  order  to  be  sold  at  the  prices 
which  attract  buyers,  foreign  as  well  as  domestic,  have  to  be 
produced  in  uniform  fashion.  If  the  foreign  buyer  requires 
painting  in  special  colors  or  extra  coats  of  varnish  it  may  be 
that  he  could  arrange  to  have  his  wishes  met  if  he  is  willing  to 
pay  $50  or  $100  more  per  car.  This  may  be  the  secret  of  a 
manufacturer's  refusal  to  accept  an  order  for  porch  chairs  which 
were  required  painted  red  instead  of  the  customary  sea  green. 
Possibly  the  buyer,  not  understanding  that  the  chairs  in  question 
were  offered  at  prices  which  were  satisfactory  because  going 
through  the  regular  routine  of  the  factory,  could  not  understand 
why  he  would  be  expected  to  pay  something  extra  for  special 
painting.  Possibly,  in  this  case,  the  manufacturer  was  just 
"pig-headed."  The  deviation  from  the  factory  routine  might, 
however,  have  been  thought  by  the  manufacturer  to  cost  more 
than  the  total  profits  in  the  future  business  that  could  be  ex- 
pected would  amount  to. 

This  is  one  of  the  features  of  American  manufacturing  which 
all  of  us  ought  to  understand  thoroughly  in  order  to  be  able  in- 
telligently to  present  the  argument  for  American  goods  in  gen- 
eral to  foreign  buyers,  who  are  sure  to  recognize  the  point  when 
it  is  understood.     Take  the  case  of  a  large  importer  of  Amer- 


62  PRACTICAL  EXPORTING 

ican  lathes.  In  a  great  many  other  countries  what  is  known  as 
a  "gap-bed"  lathe  is  much  in  demand.  The  importer  in  (ques- 
tion came  to  an  American  manufacturer  whose  regular  line  of 
lathes  he  had  been  buying  in  considerable  quantities  for  some 
time  and  offered  that  manufacturer  an  order  for  fifty  gap-bed 
lathes,  believing  that  an  initial  order  of  this  size,  coupled  with 
the  glowing  prospects  for  large  future  trade  in  similar  lathes, 
would  be  sufficient  to  induce  the  manufacturer  to  make  the 
special  pattern  desired.  But  the  manufacturer,  taking  time  to 
figure  very  carefully  all  the  elements  of  costs  involved,  found 
himself  forced  to  decline  the  proffered  business  simply  because 
he  could  not  see  any  profit  in  it.  Just  the  other  day  a  large 
shoe  manufacturer,  who  wanted  the  business,  turned  down  a 
contract  for  $1,000,000  worth  of  army  shoes  for  a  European 
Government  because  he  was  not  equipped  for  studding  the  soles 
with  hob-nails  and  could  see  no  profit  in  equipping  himself  for 
that  work, 

American  Factory  Policies. — In  the  United  States  manufac- 
turers commonly  draw  the  line  sharply  between  cheap  goods 
and  high  grade  goods.  The  same  manufacturer  seldom  produces 
both  high  and  low  grades  of  the  same  article  in  the  same  factory. 
Less  often  still  does  he  offer  two  grades  under  the  same  brand. 
It  was  always  characteristic  of  German  manufacturers  to 
"dress  up"  cheap  goods  to  look  precisely  like  high  grade  goods. 
Our  practice  is  usually  the  reverse  of  this.  We  put  out  cheap 
lines  for  what  they  are,  and  our  manufacturers  often  decline 
peremptorily  to  add  to  the  physical  attractiveness  of  cheap 
goods,  even  at  a  sufficient  extra  charge  to  more  than  cover  the 
additional  expense  involved.  Herein  lies  one  reason  of  dissatis- 
faction with  cheap  American  goods  in  markets  not  familiar  with 
our  wares  or  our  policies.  Many  foreign  buyers,  regarding 
prices  only,  expect  that  cheap  lines  will  be  as  attractive  in  ap- 
pearance and  as  finely  finished,  at  least  to  the  casual  examina- 
tion of  a  buyer,  as  the  more  expensive  goods. 

Changes  in  our  general  policy  in  this  regard  may  not  perhaps 
be  advisable,  but  it  is  undeniable  that  greater  care  in  finishing 
goods  of  all  sorts  is  an  important  desideratum .  in  the  case  of 
shipments  destined  for  foreign  countries.  Perhaps  the  most 
serious  objection  urged  against  American  engines  of  all  sorts, 


SOME  MISTAKEN  IMPRESSIONS  63 

from  big  electric  units  down  to  small  marine  motors,  is  the 
rough,  crude  finish,  or  lack  of  finish,  with  which  some  castings 
and  even  complete  machines  are  permitted  to  leave  the  American 
seaboard.  Puerile  is  not  the  j^roper  qualification  to  attach  to 
this  objection.  It  is  rooted  deep  down  in  the  experience  of  for- 
eign buyers,  and  in  that  of  their  fathers  and  grandfathers,  with 
the  products  of  other  manufacturing  nations,  and  prejudice 
and  custom  are  not  to  be  laid  aside  at  a  week's  notice. 

Practices  of  European  Manufacturers. — The  organization  of 
European  factories  is  as  a  rule  entirely  different  from  that 
which  has  grown  up  in  the  United  States.  In  principle,  Euro- 
pean manufacturers  produce  small  lots  as  distinguished  from 
our  quantity  production  and,  because  labor  is  so  much  cheaper 
in  Europe,  that  element  in  the  cost  of  goods  does  not  count  for 
as  much  as  it  does  in  our  own  country,  and  it  becomes  possible 
for  the  European  manufacturer  to  shift  constantly,  a  dozen 
times  a  day  perhaps,  from  one  article  or  one  special  feature  to 
another  which  may  be  radically  different.  The  bulk  of  the 
trade  of  a  European,  like  any  other  manufacturer,  consists  in 
the  domestic  demand  for  his  goods,  and  in  Europe  the  trade  is, 
as  a  rule,  carried  on  directly  from  factory  to  retail  customer 
with  the  consequence  that  individual  orders  are  comparatively 
small.  Nor  is  the  specialization  in  products,  as  we  know  it  in 
the  United  States,  common  in  European  factories.  In  this 
country  a  manufacturer  of  women's  shoes  seldom  if  ever  at- 
tempts to  manufacture  men's  shoes.  A  manufacturer  of  high 
grade  women's  shoes  does  not  attempt  in  the  same  factory  to 
produce  cheap  grades  of  women's  or  any  other  shoes.  The 
manufacture  of  boys'  and  girls'  shoes  is  again  a  specialized  in- 
dustry. In  Europe,  much  more  often  than  not,  all  kinds  are 
produced  in  one  factory.  Here  again  is  a  strong  arg-ument  for 
the  advantages  of  American  goods  in  general. 

It  seems  altogether  probable  that  the  fashion  which  in  par- 
ticular has  distinguished  German  manufacturers  of  "dressing 
up"  cheap  goods  to  have  all  the  appearance  of  better  goods  has 
contributed  more  than  anything  else  to  the  world-wide  charac- 
terization of  German  goods  as  "cheap  and  nasty."  The  world 
forgot  that  some  of  the  highest  quality  goods  manufactured  any- 
where were  made  in  Germany.     It  oidy  remembered,  as  a  for- 


64  PRACTICAL  EXPORTING 

eign  correspondent  of  the  Atnerican  Exporter  put  it,  that 
"German  goods  do  not  pan  out  the  promised  'just  as  good.' 
Their  manufacturers  do  not  inspire  confidence."  Or,  as  an- 
other put  it,  "  'German'  is  synonymous  with  things  of  hand- 
some but  deceitful  appearance."  Both  wrote  before  the  war, 
without  prejudice  or  bitterness. 

Some  foreign  buyers  are  at  first  quite  unable  to  understand 
the  American  policy  in  this  regard.  When  they  look  over  a 
line  of  samples  of  American  silver  plated  ware  and  find  three 
or  four  distinct  grades,  each  grade  made  in  certain  patterns, 
they  are  certain  to  demand  the  most  attractive  pattern  of  all  to 
be  manufactured  in  the  cheapest  grade.  They  cannot  under- 
stand why  the  manufacturer  refuses  to  make  in  his  cheapest 
grade  a  pattern  which  he  confines  exclusively  to  his  highest 
priced  grade.  An  American  manufacturer  of  lead  pencils  refuses 
to  put  out  his  cheapest  pencil  except  in  plain  wood.  A  German 
manufacturer  would  deliver  the  same  quality  of  pencil  but 
would  paint  and  varnish  and  polish  the  wood  and  even  stamp  it 
in  gold  letters,  so  that  externally  it  could  not  be  distinguished 
from  a  pencil  costing  twice  as  much.  Certain  German  manufac- 
turers, noting  a  large  sale  for  American  meat  choppers  in  Eu- 
rope, put  out  a  machine  in  competition  with  the  American.  The 
German  machine,  instead  of  being  tinned  like  the  American,  was 
enameled,  and  hence  made  a  much  more  attractive  appearance, 
while  it  sold  at  competitive  prices.  However,  dealers  jealous  of 
their  reputation  with  customers  quickly  found  that  the  German 
machines  were  by  no  means"  so  satisfactory  in  operation  as  the 
American  nor  did  they  give  one  quarter  the  service.  A  certain 
form  of  patented  corkscrew  was  invented  in  the  United  States 
and  quickly  achieved  large  sales  in  Europe.  It  tempted  imita- 
tion and  the  Germans  put  out  corkscrews  of  similar  design  but 
of  such  poor  wire  that  it  was  easy  to  bend  them  with  one's  fingers. 
The  German  imitations  have  even  been  imported  into  this  coun- 
try, sold  at  lower  prices  than  American  manufacturers  can  make, 
and  furnish  an  example  of  the  fact  that  good  goods  and  cheap 
goods  can  be  sold  side  by  side  the  world  over.  High  grade  nip- 
pers and  pliers  were  exported  in  considerable  quantities  from 
the  United  States  to  Germany  because  the  Germans  were  not 
able  to  produce  similar  tools  in  as  good  qualities  at  equally  as 


SOME  MISTAKEN  IMPRESSIONS  65 

attractive  prices.  On  the  other  hand,  there  was  formerly  a  large 
importation  into  the  United  States  of  cheap  German  nippers  and 
pliers  whose  prices  we  could  not  equal,  whose  qualities  we  per- 
haps did  not  care  to  produce. 

Catering  to  Markets. — Of  course,  there  is  a  great  deal  in  the 
theory  that  a  trade  may  be  largely  increased  by  catering  to  the 
peculiarities  or  the  prejudices  of  a  given  market.  If  manufac- 
turers find  it  impossible  profitably  to  make  desired  changes  in 
their  standard  products,  yet  there  are  doubtless  many  of  them 
who  have  capacity  in  their  plants  for  increased  production  and 
might  profit  by  the  manufacture  of  specialties  that  are  de- 
manded in  certain  or  in  many  markets  in  sufficient  quantities  to 
make  their  manufacture  worth  while.  This  is  a  question  of  add- 
ing a  line  rather  than  adapting  existing  goods.  A  few  years 
ago  Lord  Cromer  sent  to  the  London  Times  an  article  received 
by  him  from  a  native  of  British  India  from  which  the  following 
may  be  quoted:  "The  British  exporter  does  not  understand 
why  his  marrow  spoons  are  refused  and  those  'made  in  Ger- 
many' find  a  ready  market  in  India.  The  answer  is  simple. 
The  English  marrow  spoon  is  too  thick  for  the  bones  of  Indian 
sheep.  The  German  manufacturer  makes  the  marrow  spoons 
suit  the  bones  of  Indian  sheep.  The  egg  cup  that  the  British 
exporter  sends  to  India  is  too  large  for  the  eggs  of  the  Indian 
hen.  The  German  manufacturer  measures  the  egg  and  then 
makes  the  egg  cup  for  the  Indian  market.  The  Birmingham 
manufacturer  thinks  he  has  a  grievance  because  Gennan  scissors 
of  the  same  price  find  a  better  market  in  India  than  his  own 
make.  He  does  not  know  that  the  secret  of  Germany's  success 
in  scissors  is  due  to  the  fact  that  the  village  tailor  has  a  super- 
stitious regard  for  his  thumb,  which  he  wants  to  keep  in  ijiore 
comfort  than  his  index  finger.  He  therefore  prefers  a  pair  of 
scissors  which  has  a  larger  hole  for  the  thumb  than  for  the  in- 
dex finger.  The  orthodox  manufacturer  of  Binningham  does 
not,  or  will  not,  study  the  convenience  of  the  Indian  villagers. 
What  he  ignores  or  neglects  as  mere  prejudice  is  profitably 
turned  to  account  by  his  German  rival."  ^ 

1  The  trivial  importance  of  all  possible  Indian  trade  in  e<rg  cups  and  mar- 
row spoons  should  merely  serve  as  an  indication  of  German  policy. 


66  PRACTICAL  EXPORTING 

So  far  as  American  disposition  toward  catering  to  foreign 
demands  is  concerned,  it  seems  probable  that  it  will  be  deter- 
mined by  very  much  the  same  considerations  as  affect  a  similar 
disposition  toward  domestic  markets.  A  salesman  visiting 
Texas,  for  example,  may  urge  the  manufacture  of  a  special 
article  or  the  introduction  of  special  features  in  an  established 
line,  with  eloquent  claims  as  to  the  big  business  which  he  could 
do  if  the  innovation  were  made.  The  salesman's  principal,  the 
manufacturer,  may  sometimes  comply  with  such  a  recommenda- 
tion and  sometimes  he  may  not,  reaching  a  conclusion  out  of  his 
knowledge  of  human  frailties  and  salesmen's  optimism,  and 
forming  his  own  judgment  as  to  probable  profits  to  be  secured. 
The  manufacturer's  decision  in  regard  to  manufacturing  special 
goods  for  foreign  markets  will  very  likely  be  guided,  and  prop- 
erly should  be  guided,  by  much  the  same  business  considerations. 

American  Peculiarities. — It  is  always  worth  while  teaching 
our  foreign  customers  and  prospects  as  much  as  possible  regard- 
ing established  American  practice  and  peculiarities,  and  ex- 
plaining how  they  have  grown  up  and  why  we  regard  them  as 
desirable,  especially  when  we  meet  buyers  face  to  face.  Prob- 
ably no  American  machinery  or  hardware  is  produced  in  the 
United  States  that  is  either  so  heavy  or,  perhaps,  so  durable  as 
similar  products  of  British  and  some  other  European  factories. 
It  is  perhaps  the  most  distinguishing  characteristic  of  American 
articles  in  these  branches  that  they  are  of  comparatively  light 
weight,  yet  believed  by  us  to  be  sufficiently  strong  for  the  pur- 
poses for  which  intended,  and  built  along  graceful  and  pleasing 
lines.  The  American  manufacturer,  it  has  been  remarked,  does 
not  produce  a  machine  that  is  intended  to  be  handed  down  as  an 
heirjoom  to  posterity.  The  American  users  of  our  machines 
expect  to  run  them  at  the  highest  possible  speed,  securing  the 
greatest  per  diem  output,  realize  that  sooner  or  later  thej^  will 
be  worn  out  and  are  then  quite  content  to  scrap  them,  perhaps 
even  earlier  while  still  in  good  condition,  because  hewer  ap- 
paratus has  been  designed,  new  inventions  made,  improvements 
introduced  that  will  make  the  purchase  of  up-to-date  apparatus 
desirable  because  of  an  actual  economy  or  superiority  in  pro- 
duction thus  to  be  effected.  This  American  practice  has  been 
recognized  by  foreign  users  of  machines  to  be  desirable,  at  least 


SOME  MISTAKEN  IMPRESSIONS  67 

up  to  a  certain  point,  and  the  principle  has  to  some  extent  been 
adopted  abroad.  Meanwhile,  the  foreign  prejudice  in  favor  of 
more  substantial  and  heavier  tools  has  undoubtedly  had  a  cer- 
tain influence  in  modifying  the  American  tendency  in  the  other 
direction.  Indeed,  it  is  probable  that  a  great  many  more  Amer- 
ican goods  have  been  imitated  abroad  than  there  are  imitations 
of  European  goods  made  in  the  United  States  of  America. 
Four  .years  ago  a  leading  English  silk  manufacturer  confessed 
in  print  that  Americans  ''have  made  considerable  advances  in 
the  perfecting  of  machinery  they  originally  got  from  us,  and 
their  improved  machinery  has  been  adopted  by  British  firms," 

The  growth  of  American  influence  in  foreign  countries  is  not 
only  notable  but  is  usually  a  source  of  pride  to  us,  unless  we 
except  the  spread  of  American  yellow  journalism.  Improve- 
ments in  European  show  windows,  in  advertising  practice,  the 
decadence  of  the  top  hat  among  business  men  of  London,  all 
bear  witness  to  the  influence  of  American  ideas.  This  principle, 
however,  does  not  mean  that  occasionally,  but  not  often,  ideas 
originated  in  the  United  States  have  not  been  improved  upon 
abroad. 

There  is  one  feature  of  American  industry  which  is  distinctive 
or  at  least  is  carried  farther  in  this  country  than  in  almost  any 
other,  but  which  perhaps  is  not  quite  wholly  praiseworthy.  It 
does  undoubtedly  affect  our  export  business  in  different  lines. 
This  is  the  constant  changing  in  fashions  here.  It  applies  not 
alone  to  millinery,  but  affects  many  other  phases  of  our  life  and 
our  goods.  Nowadays  an  American  changes  the  style  of  his  or 
her  boots  and  shoes  with  each  recurring  season.  The  American 
gentleman  is  almost  as  particular  about  the  style  of  his  hat  as 
is  the  American  (or  almost  any  other)  lady.  These  things  are 
not  true,  in  principle  or  in  equal  measure,  of  people  in  other 
countries.  Old  styles,  time  honored  favorites  in  patterns,  etc., 
remain  popular  for  fifty  or  a  hundred  years,  sometimes. 

A  radical  difference  in  principles  involved  characterizes  many 
products  of  American  factories,  clearly  enough  affecting  compe- 
tition. But,  however  proud  we  may  be  of  American  ideas  and 
practices,  we  must  always  be  on  our  guard  against  what  an 
Australian  correspondent  calls  "American  ingenuity  and  skill 
damned  by  blow  and  bounce." 


CHAPTER  III 

MARKETS  FOR  AMERICAN  GOODS 

The  Relative  Values  of  Foreign  Markets — \Yhen  Patents  and 
Trademarks  in  Other  Countries  are  Required — IStatistics  of 
American  Export  Trade — Our  Frincipal  Foreign  Customers 
— Trade  Fractices  Which  Are  Strange  to  Us — The  Moneys 
of  Other  Lands  and  Their  Values. 

OWING  doubtless  to  the  extensive  advertising  which  the 
Latin  American  markets  have  received  tlirough  tlie 
building-  ol:  the  Panama  Canal  and  the  activities  of  the 
important  institution  known  as  the  Pan  American  Union  at 
Washington,  a  cooperative  and  admirable  organization  main- 
tained in  part  through  contributions  from  all  of  the  Latin  Amer- 
ican republics,  it  is  probable  that  our  trade,  actual  and  prospec- 
tive, with  the  markets  in  question  is 'considered  of  exaggerated 
importance  by  most  people  in  the  United  States.  Many  manu- 
facturers, when  talking  of  export  trade,  specifically  or  by  in- 
ference restrict  their  discussion  to  what  they  are  apt  to  refer  to 
as  ' '  South  America, ' '  by  which  they  may  be  understood  to  mean 
all  Latin  America,  which  consists  not  only  of  the  South  Ameri- 
can continent  but  of  the  six  Central  American  republics,  with 
Mexico,  which  geographically  is  called  North  America,  and  the 
West  Indian  republics  of  Cuba,  Santo  Domingo  and  Haiti. 

The  distinction  between  these  different  markets  should  be 
sharply  drawn.  It  is  an  evidence  of  inexcusable  ignorance  to 
confuse  Central  America  with  South  America,  and  there  is  a 
marked  difference  in  the  trade  of  these  different  sections. 

RELATIVE  VALUES  OF  FOREIGN  MARKETS  ' 

But  no  manufacturer  can  afford  to  forget  the  existence  of 
other  rich  and  attractive  markets  or  neglect  them  if  he  is  looking 
to  the  largest  possible  returns  and  profits  froai  his  export  en- 
deavors.    Australasia,  the  markets  of  the  Par  East,  the  Middle 

1  Elaborate  data  ref^^arding  all  foreign  markets  is  to  be  found  in  "The 
lv\ porter's  ({azetteer  of  Foreign  Markets,"  by  Lloyd  R.  Morris,  Research 
Editor,  American  Exporter. 

68 


MARKETS  FOR  AMERICAN  GOODS  69 

East  and  the  Near  East,  South  Africa,  and  above  all  Europe, 
are  and  in  the  future  will  be  far  more  fertile  fields  than  the  man 
who  has  listened  only  to  jjrophecies  of  the  development  of  South 
America  through  the  opening  of  the  Panama  Canal  is  apt  to 
reali/ce. 

The  commercial  aspect  of  the  world  has  not  been  radically 
changed,  has  hardly  noticeably  been  changed,  by  any  develop- 
ments of  the  Great  War.  The  disorganization  of  European 
manufacturing  industries  means  no  more  strenuous  competition 
in  the  future  to  be  feared  by  American  manufacturers  than  was 
offered  before  the  war.  Indeed  appearances  seem  to  indicate 
that  future  competition  will  be  less  one  of  price  than  of  organiza- 
tion, intelligently,  scientifically  directed  effort  and  persistent 
aggressiveness.  None  of  the  world '-s  markets  were  strangers 
to  American  goods  before  the  war.  It  seems  certain  that  for 
years  to  come  the  relative  values  to  us  of  foreign  markets  will 
remain  very  much  as  they  have  been  in  the  "past. 

Fear  to  Attack  European  Markets. — It  has  sometimes  hap- 
pened that  manufacturers  have  neglected  to  inquire  about  pos- 
sible European  markets  for  their  goods.  This  seems  to  have 
occurred  either  because  a  manufacturer  may  have  feared  imita- 
tion of  his  products  by  European  makers,  may  have  fancied  that 
it  would  be  necessary  for  him  to  secure  expensive  patents  or 
trademarks,  or,  sometimes  perhaps,  because  he  has  thought  that 
even  were  he  to  establish  some  trade  in  European  coun- 
tries it  would  not  last  very  long  because  European  manufac- 
turers would  quickly  produce  similar  goods  and  rob  him  of  the 
benefits  of  later  trade.  Both  assumptions  have  usually  been  un- 
warranted, probably  will  be  unwaranted  in  the  future  when  the 
great  cataclysm  of  the  war  shall  have  subsided.  No  manu- 
facturer can  delude  himself  with  the  thought  that  if  he  is  pro- 
ducing a  desirable  article,  even  if  he  sells  it  nowhere  else  than 
here  in  the  United  States,  keen,  aggressive  European  manufac- 
turers do  not  know  all  about  it.  Trade  restricted  to  our  home 
markets  does  not  ensure  secrecy.  Manufacturers  in  other  coun- 
tries, like  American  manufacturers,  are  quite  shrewd  and  enter- 
prising enough  to  be  constantly  on  the  lookout  for  something 
new  that  seems  likely  to  be  popular  and  profitable.  If  there 
is  an  article  produced  in  any  part  of  the  world  which  seems  to 


70  PRACTICAL  EXPOBTING 

them  to  answer  this  description  they  will  not  wait  for  a  for- 
eigner to  introduce  it  into  their  home  markets. 

Again,  while  it  may  be  true  that  local  manufacturers  in  any 
country  will  not  see  possibilities  in  a  new  article  until  its  manu- 
facturer in  some  other  country  has  begun  to  ship  it  into  the 
foreign  country,  yet  a  distinct  impression  must  be  made  on  the 
trade  of  the  new  market  before  local  manufacturers  will  think 
it  worth  while  adopting  it  or  attempting  to  imitate  it.  The 
American  manufacturer,  for  example,  may  find  a  good  deal  of 
satisfaction  and  profit  in  the  aggregate  of  the  foreign  trade  that 
he  establishes.  That  aggregate  may  be  made  up,  let  us  say  just 
by  way  of  example,  by  a  trade  in  normal  times  of  $50,000  a 
year  in  England,  $20,000  a  year  in  France,  $10,000  a  year  in 
Italy,  and  so  on.  But  it  is  clear  that  the  trade  of  $50,000  a 
year  in  Great  Britain  alone  would  not  make  a  very  deep  impres- 
sion on  a  competing  British  manufacturer.  He  is  pretty  sure  to 
doubt  whether  profits  from  that  trade,  or  even  the  resulting 
trade  to  which  it  may  lead,  will  be  enough  to  warrant  his  start- 
ing quite  a  new  line,  very  likely  installing  expensive  machinery 
and  patterns  and  making  all  the  other  new  and  costly  arrange- 
ments necessary.  Furthermore,  as  we  shall  see  a  little  later  in 
our  consideration  of  various  aspects  of  export  trade,  there  are 
many  ways  in  which  the  American  manufacturer  may  safeguard 
the  growth  and  general  develoj)ment  of  his  trade  in  foreign 
countries,  may  secure  for  himself  the  advantages  of  the  start 
which  he  has  obtained  and  make  it  extremely  difficult  for  any 
one  else,  local  manufacturers  included,  to  rob  him  of  these  ad- 
vantages. 

Timidity  Loses  Trade — The  effects  on  the  timid  and  unen- 
quiring  of  a  fear  to  'enter  markets  where  competing  manufactur- 
ing industries  abound  has  been  evident  for  many  years  past  in 
the  case,  for  example,  of  some  American  boot  and  shoe  manu- 
facturers. Ever  since  the  modern  and  astonishing  growth  of 
our  exports  to  Europe  in  this  line,  the  veritable  invasion  of 
Europe  by  American  boots  and  shoes,  manufacturers  in  this 
country  have  not  been  lacking  who  have  shrugged  their 
shoulders  declaring  that  it  could  not  last,  that  it  would  be  only 
a  question  of  time  before  European  manufacturers  "froze  us 
out."     And   these   manufacturers  have   rested   content   with   a 


MARKETS  FOR  AMERICAN  GOODS  71 

fraction  of  the  export  trade  they  might  have  had.  For,  al- 
though twenty  years  have  elapsed  since  the  first  real  introduc- 
tion of  American  shoes  into  Germany,  our  trade  had  continu- 
ously been  growing  year  by  year  up  to  the  outbreak  of  the  war, 
increased  from  $733,000  in  1911  to  $1,376,000  in  1914—80  per 
cent,  in  only  three  years.  Our  boot  and  shoe  trade  in  Great 
Britain  has  not  grown  in  similarly  extraordinary  ratio  in  recent 
years,  but  it  has  held  its  own — of  course  we  must  leave  out  of 
consideration  all  "war  time"  statistics — and  it  must  be  remem- 
bered that  the  British  markets  were  far  more  thoroughly  worked 
and  developed  at  an  earlier  day  than  were  markets  of  the  Conti- 
nent of  Europe. 

No  more  striking  example  of  American  possibilities  in  com- 
peting lines  can  be  imagined  than  the  growth  and  present  status 
of  our  export  shoe  trade.  In  the  face  of  a  duty  twice  as  great 
as  duties  imposed  on  British  or  Austrian  shoes  prior  to  1910, 
our  American  exports  establishing  themselves  in  France  and 
fast  grew  into  really  imposing  volume.  We  have  already  re- 
marked on  the  effort  of  European  manufacturers  to  produce 
American  shoes  in  their  own  factories  and  thus  stem  the  Amer- 
ican invasion,  as  they  called  it.  "VVe  have  noted  how  they  have 
purchased  American  machinery,  American  leather,  American 
lasts  and  it  may  also  be  remarked  have  imported  American  fac- 
tory superintendents,  all  without  the  slightest  avail  and  all  in 
the  face  of  a  constantly  growing  American  business.  Emer- 
son's famous  dictum  may  be  recalled:  "'If  a  man  make  a  better 
mouse  trap  than  his  neighbor,  though  he  build  his  house  in  the 
woods,  the  world  will  make  a  beaten  path  to  his  door." 

FOREIGN  PATENTS  AND  TRADE  MARKS 

Fears  of  Americans  to  seek  trade  in  Europe  because  of  the 
fancied  expense  or  difficulty  in  securing  European  patent  rights 
are  often  unjustified.  A  great  many  American  goods  are  sold 
in  European  countries  which  have  absolutely  no  patent  protec- 
tion. In  such  cases  it  is  not  regarded  as  necessary  either  be- 
cause it  would  be  difficult  or  impossible  for  European  manufac- 
turers to  produce  the  same  or  equally  as  good  articles,  or 
because  it  has  been  considered  that  patents  might  await  develop- 
ment of  business.     In  yet  other  instances  reliance  has  been  placed 


72 


PRACTICAL  EXPORTING 


FOREIGN   TRADE-MARK   CONDITIONS 

Must 

h 

Trade 
Mark 

Nolei 

Restoration 

fi^ho  May 

Term  of 

See  refer- 

Country 

AdvisabU  or 

Register? 

First  be 

Registration 

ences 

Necessary 

Registered 
at 

below 

Home? 

Argentina      .... 

Necessary 

First  applicant 

No 

10  years 

1 

Australia       .... 

Advisable 

First  applicant 

No 

14  years 

2—4 

Avistria      

Advisable 

First  applicant 

Yes 

10  years 

1—3 

Belgium      

Advisable 

First  user 

No 

Unlimited 

1—3 

Bolivia      

Compulsory 

First  applicant 

No 

10  years 

1—5 

Brazil     

Necessary 

First  applicant 

No 

15  years 

1—4 

Bulgaria      

Advisable 

First  applicant 

Yes 

10  years 

4 

Chile      

Advisable 

First    applicant 

No 

10  years 

1 

China       

Advisable 

First  applicant 

Yes 

1—6 

Colombia      .... 

Necessary 

First  applicant 

Yes 

20  years 

1—4 

Costa    Rica    .  .  . 

Advisable 

Any   user  of  mark 

No 

15  years 

1 

Cuba      

Advisable 

First    applicant 

Yes 

15  years 

1 

Czechoslovakia 

Advisable 

First  applicant 

Yes 

10  years 

1 

Denmark     

Unimportant 

First   applicant 

Yes 

10  years 

4 

Ecuador      

Advisable 

First  applicant 

No 

20  years 

1—2 

Egypt     

Advisable 

First  applicant 

Yes 

10  years 

1—6 

Finland      

Unimportant 

Any   user   of   mark 

Yes 

10  years 

3 

France     

Advisable 

First    applicant 

No 

15  years 

1—2—4 

Germany      .... 

Necessary 

Any   user   of  mark 

Yes 

10  years 

1 

Great    Britain    . 

Necessary 

Any   user  of  mark 

No 

14  years 

1—2—4 

Greece     

Not  necessary 

Any   user  of  mark 
for    one    year 

Yes 

10  years 

3 

Guatemala 

Advisable 

Any     applicant 

Yes 

10  years 

1 

Holland     

Advisable 

First  user  of  mark 

No 

20  years 

1—3 

Honduras      .... 

Advisable 

First  user  of  mark 

Yes 

10  years 

1—3 

Hungary       .... 

Advisable 

First   applicant 

Yes 

10  years 

1—4 

India     

Advisable 

First  user   of   mark 

No 

Unlimited 

1—6 

Italy     

Advisable 

Any   user   of  mark 

Yes 

Unlimited 

1—3 

Japan     

Advisable 

Any  user   of  mark 

Yes 

20  years 

1—3 

Jugo-Slavia     .  .  . 

Unimportant 

Any   user  of  mark 

Yes 

Unlimited 

1 

Mexico     

Advisable 

Any  owner  of  mark 

No 

20  years 

2—4 

New    Zealand    . 

Advisable 

First  user    of   mark 

No 

14  years 

2 

Nicaragua 

Necessary 

First  applicant 

No 
Yes 
Yes 

10  years 

1 

Norway     

Advisable 

Any  user  of  mark 

10  years 

1 

Panama     

I'nimportant 

Any   user   of   mark 

10  years 

3 

Paraguay     .... 

Necessary 

First  applicant 

No 
No 

10  years 

1 

Peru     

Necessary 

Any  user   of  mark 

10  years 

1 

Philippines     ...  * 

Not  necessary 

Any   user   of   mark 

No 
Yes 

30  years 

Poland     

Advisable 

Any   user   of  mark 

10  years 

i— 4 

Porto    Rico    .  .  . 

L'ndecided 

Registrant     in  U.S. 

Yes 
No 
Yes 

20  years 

Portugal      

Necessary 

First  applicant 

10  years 

i 

Roumania 

Necessary 

First  applicant 

IS  years 

3 

Russia     

Advisable 

Any   user   of  mark 

Yes 

10  years 

1—4 

Salvador      

Advisable 

First  user   of   mark 

Yes 

20  years 

1—2—4 

Santo    Domingo 

Unimportant 

Any   user   of  mark 

Yes 

20  years 

1 

Siam     

I'nimportant 

Any   user   of  mark 

Yes 

12  years 

1 

South    Africa     . 

Advisable 

Any   user   of  mark 

No 

14  years 

1—2—4 

Spain     

Advisable 

Any   user   of  mark 

Yes 

5,  10   or   20 
years 

4 

Sweden     

Not  necessary 

Any  user  of  mark 

Yes 

10  years 

1 

Switzerland     .  . 

Advisable 

Any    manufacturer 

Yes 

20  years 

3 

Turkey     

Not  necessary 

.Any  own er  of  mark 

No 

15  years 

1—3 

ITruguav      

Necessary 

First   applicant 

Yes 

10  years 

1—2—4 

Venezuela     .  . 

Advisable 

First  user    of   mark 

Yes 

30  years 

1 

NOTES 

1 — Ownership    a 

squired    only    through    registration. 

2 — Suit  cannot  fc 

e  brought   against   infringers  until  n 

nark  ha. 

been  registe 

red 

3 — Registration 

s  granted    subject    to    rights    of   pric 

r   user. 

4— Registration 

s   regarded    as  prima-facie  evidence 

of   title 

to   a   mark. 

It    only 

becomes  < 

efinative  after  a   certain   period. 

5 — Registration 

is   compulsory    in    Bolivia. 

6— No  special  lav 

js  are  in  force.  It  is  customary  to  de 

posit  m 

irks  with  loca 

1  courts. 

MARKETS  FOR  AMERICAN  GOODS  73 

on  trademarks,  and  goods  have  been  introduced  under  a  name 
which  has  been  duly  registered  as  a  trademark  and  have  made  a 
place  for  themselves  which  no  imitations  under  other  marks  could 
occupy. 

When  Patents  and  Trademarks  Become  Necessary. — The  de- 
sirability of  foreign  patents  and  trademarks  in  markets  where 
trade  is  likelj^  to  be  worth  while  is  by  no  means  to  be  denied. 
Every  manufacturer  really  in  earnest  about  the  development  of  a 
big  foreign  business  must  not  neglect  such  precautions.  The 
most  cautious  will,  however,  run  little  risk,  if  so  disposed,  in  tak- 
ing their  first  steps  toward  establishing  their  trade  in  any  foreign 
country  without  patent  protection.  However,  a  keen  watch  must 
be  kept  on  the  growth  and  development  of  the  trade  and  patents 
or  trademarks  secured  as  early  in  the  game  as  possible. 

In  a  few  countries  patents  to  hold  valid  must  be  worked,  i.e., 
the  protected  articles  must  be  locally  manufactured  within  a 
reasonable  time  after  the  granting  of  the  patent.  Sometimes  the 
terms  of  such  laws  may  be  met  by  the  establishment  of  an  assem- 
bling plant,  utilizing  chiefly  parts  shipped  from  the  American 
factory ;  sometimes  foreign  manufacturers  take  up  the  new  line 
on  a  royalty  basis — especially  when  the  original  makers'  efforts 
have  meanwhile  met  with  success  in  their  introductory  work. 
Often,  however,  chief  reliance  is  placed  on  the  trademark,  with 
or  without  support  from  patent  rights.  The  effort  in  such  cases 
is  to  make  the  brand  so  well  known  and  so  widely,  accepted  and 
demanded  that  no  other  similar  article  under  another  name  or 
mark  can  take  its  place. 

In  many  countries  of  the  world,  Germany  included,  the  first 
applicant  for  a  trademark  secures  the  right  to  its  use  whether  or 
not  he  is  the  actual  manufacturer  of  the  goods,  or  is  (according 
to  American  theories)  justly  entitled  to  the  rights  he  seeks.  The 
manufacturer  who  waits  too  long  before  he  seeks  trademark  pro- 
tection for  his  own  goods  may  sometimes  awake  to  the  most  un- 
pleasant discovery  that  he  cannot  ship  those  goods  into  a  given 
market  except  through  a  certain  person  who  has  registered  in 
his  own  name  the  manufacturer's  trademark,  unless  it  is  possible 
for  him  to  buy  off  that  person  for  a  good  round  sum.  This,  how- 
ever, has  no  exclusive  bearing  on  trade  with  Europe,  for  -pre- 
cisely similar  practices  characterize,  and  in  even  more  disagree- 


74  PRACTICAL  EXPORTING 

able  fashion,  such  countries  as  Japan  and  Argentina,   among 
others. 

FOREIGN  MARKETS  REVEALED  BY  STATISTICS 

So  far  as  volume  of  business  to  be  secured  is  concerned,  in 
almost  every  branch  of  industry,  except  in  certain  cruder  forms 
of  iron  and  steel  products,  it  is  the  European  markets  that  have 
actually  been  our  biggest  customers  in  pre-war  years.  The  popu- 
lar impression  to  the  contrary,  it  is  Europe  which  in  normal  times 
has  bought  from  us  far  more  of  our  manufactured  goods  than  has 
any  other  part  of  the  world. 

Exports  of  Manufactured  Goods. — We  hear  a  great  deal  of 
the  large  percentage  of  manufactured  goods  absorbed  by  certain 
South  American  markets.  Such  statements  are  true,  but  the 
total  volume  of  the  trade  has  not  begun  to  compare  with  that  we 
have  enjoyed  in  times  of  peace  in  Europe.  In  1914,  33  per  cent, 
were  "manufactures"  in  our  total  exports  of  almost  $1,500,000,- 
000  to  Europe ;  88  per  cent,  were  manufactures  in  our  exports  to 
South  America,  but  those  exports  only  amounted  to  $121,000,000, 
In  other  words,  we  shipped,  before  the  war,  almost  five  times  the 
value  of  manufactured  goods  to  Europe  that  we  shipped  to  South 
America.  To  North  America,  other  than  the  United  States,  our 
exports  in  1914  amounted  to  $529,000,000,  66  per  cent,  of  which 
consisted  of  manufactured  goods.  Seventy-five  per  cent,  of  our 
exports  to  Africa  of  $28,000,000  were  manufactured  goods,  61 
per  cent,  were  manufactures  in  the  $113,000,000  of  our  exports 
to  Asia.  To  Oceania  we  shipped  $83,000,000,  of  which  86  per 
cent,  were  manufactures. 

Our  Share  in  the  Imports  of  Other  Countries. — Statistics  are 
notoriously  dry  reading,  yet  we  ought  to  give  them  some  con- 
sideration, if  for  no  other  reason  in  the  hope  of  arriving  at  a  true 
estimate  of  the  value  to  us  of  our  various  foreign  markets  as  they 
existed  prior  to  the  war,  anticipating  that  relative  values  will  be 
about  the  same  when  the  trade  of  the  world  resumes  peaceful 
channels.  For  example,  we  are  told  of  the  small  proportion  of 
South  American  trade  which  the  United  States  enjoy.  As  a  mat- 
ter of  fact  it  has  not  been  notably  small  proportionately  and 
most  of  our  critics  would  be  confounded  were  they  to  know  that 
we  actually  enjoyed  just  as  large  a  share  of  the  total  trade  of 


MARKETS  FOR  AMERICAN  GOODS  75 

Europe  itself.  Col.  0.  P.  Austin,  late  Chief  of  the  Bureau  of 
Statistics  of  the  Department  of  Commerce,  is  authority  for  these 
pre-war  figures :  ' '  The  total  imports  of  the  European  countries 
are  about  $13,000,000,000,  of  which  we  supply  about  12  per  cent. ; 
those  of  Asia  and  Oceania  $2,800,000,000,  of  which  we  supply 
about  6  per  cent. ;  those  of  South  America  $1,000,000,000,  of  which 
we  supply  about  12  per  cent.;  those  of  Africa  $500,000,000,  of 
which  we  supply  5  per  cent. ;  those  of  North  America,  other  than 
the  United  States,  $1,000,000,000,  of  which,  by  reason  of  prox- 
imity, we  supply  over  50  per  cent."  Let  the  relative  total  im- 
ports of  these  several  parts  of  the  world  be  carefully  noted,  as 
well  as  the  share  of  the  United  States  in  each  instance. 

In  the  ten  years  ending  1914  the  grand  total  of  our  Ameri- 
can export  trade  increased  61  per  cent.  Nearly  63  per  cent,  of 
this  grand  total  was  exported  to  Europe.  Our  export  trade  to 
tliat  general  destination  in  the  years  in  question  increased  40  per 
cent.  The  increase  in  our  trade  to  other  countries  of  North 
America  increased  125  per  cent.,  to  South  America  148  per  cent., 
to  Asia  and  Oceania  110  per  cent.,  to  Africa  12i/^  per  cent. 

The  United  Kingdom  alone  took  more  than  one  quarter  of  our 
total  exports  of  all  sorts  of  American  goods ;  the  whole  continent 
of  South  America  accounted  for  only  5.27  per  cent,  of  our  total 
exports.  Germany  bought  from  us  nearly  three  times  as  much  as 
all  of  South  America.  Cuba  alone,  thanks  to  its  proximity  to  us 
and  to  tariff  favors  granted  American  goods,  took  from  us  con- 
siderably more  than  one-half  as  much  as  all  South  America 
bought  in  1914.  Asia  was  almost  as  large  a  buyer  of  American 
goods  as  South  America.  Two  countries  in  South  America,  the 
Argentine  Republic  and  Brazil,  counted  for  three-fifths  of  our 
trade  with  the  whole  continent. 

Having  such  facts  as  the  foregoing  in  mind,  let  us  briefly  re- 
view some  other  characteristics  of  the  several  broad  divisions  of 
our  export  markets. 

EUROPE  AS  AN  EXPORT  MARKET 

The  general  importance  of  our  past  trade  with  Europe,  in 
times  of  peace,  has  already  been  sufficiently  emphasized.  Ho\av 
ever,  the  manufacturer  of  a  specific  article  will  do  well  to  investi- 
gate so  far  as  he  can  the  actual  figures  referring  to  exports  of  his 


76  PRACTICAL  EXPOBTING 

own  goods.  Germany  has  manufactured  cheaper  watches  than 
we  can,  yet  before  the  war  she  bought  American  watches  to  twice 
the  value  of  those  we  ship  to  all  Latin  America.  The  sewing 
machine  manufacturer  who  has  fancied  that  Latin  America 
would  be  his  best  market  may  be  surprised  to  find  that  although 
our  largest  American  manufacturer  of  sewing  machines  has  a 
factory  in  Glasgow  where  thousands  of  hands  are  employed,  yet 
Great  Britain  has  also  imported  from  the  United  States  as  many 
American  sewing  machines  per  annum  as  has  all  of  Latin 
America  put  together.  The  United  Kingdom  alone  buys  annu- 
ally from  us  in  times  of  peace,  more  locks  and  hinges,  and  more 
saws  than  does  all  of  South  America.  European  markets  as  a 
whole  absorbed  in  1914  twice  the  value  of  the  purchases  of 
American  shoes  of  all  the  countries  of  South  America  combined. 
France,  the  mother  of  automobiles,  before  the  war  was  buying  as 
many  American  cars  as  was  Mexico,  our  next  door  neighbor,  and 
England  three  times  as  many  as  all  South  America.  None  the 
less,  there  are  manufacturers  of  many  goods  who  will  not  for 
good  reason  regard  Europe  as  so  desirable  a  market  as  others. 
An  American  manufacturer  of  silk  neckties  may,  for  example, 
doubt  his  chances  of  cheaply  and  quickly  introducing  his  prod- 
ucts in  France  while  he  may  think  he  has  an  excellent  oppor- 
tunity in  Australia  or  in  some  of  the  countries  of  South  America. 

Undoubtedly  our  export  trade  to  the  European  countries  will 
be  somewhat  modii.ed  for  sc^veral  years  following  the  res- 
toration of  peace.  There  will  be  many,  enormous  and  varied  de- 
mands from  Europe  which  we  shall  have  to  meet — some  of  them 
perhaps  of  temporary  character.  This  may  be  especially  true  in 
building  and  engineering  lines.  At  the  same  time,  there  will 
spring  up  again  the  same  opportunities  for  American  products 
that  existed  prior  to  the  war  and  in  certainly  as  great,  probably 
greater,  volume.  Europe  will  demand  in  the  future  more  care- 
ful and  more  studious  attention  on  the  part  of  American  manu- 
facturers than  it  has  in  the  past.  Competition,  at  first  quiescent, 
will  undonl)tedly  grow  in  intensity,  but  will  no  more  unfavorably 
affect  chances  for  business  in  Europe  itself  than  it  will  affect 
chances  for  business  in  competition  with  European  manu- 
facturers in  otliri"  parts  of  the  world. 

Interstate  European  Commerce. — The  organization  of  trade 


MARKETS  FOR  AMERICAN  GOODS  77 

in  Europe  differs  materially  from  that  in  our  other  export 
markets.  The  Germans  do  not  call  Switzerland  or  Austria,  for 
example,  export  markets.  When  the  German  talks  of  export 
trade  he  means  oversea  trade,  although  of  course  his  official 
statistics  apply  to  all  trade  beyond  the  boundaries  of  the  German 
Empire.  The  several  countries  of  Europe  are  so  closely  situated 
and  so  intimately  allied  by  rail  and  telegraph  and  highway  that 
Germany,  Austria  and  Switzerland,  for  example,  are  comparable 
to  New  York,  Ohio  and  Pennsylvania,  It  follows,  therefore,  that 
the  trade  of  European  manufacturers  with  their  customers  in 
neighboring  countries  has  been  established  on  a  very  different 
basis  from  trade  of  the  same  manufacturers  with  customers  in 
Australia  or  South  America. 

The  interstate  European  trade  is  largely  one  direct  from 
manufacturer  to  retail  shop,  without  the  intermediary  of  the 
wholesaler  or  jobber.  Communication  between  manufacturer  and 
customer  is  quick  and  easy.  General  relations,  including  credits, 
are  therefore  affected  and  individual  orders  as  a  rule  are  only  a 
fraction  the  size  which  proper  export  orders  are  usually  expected 
to  assume.  All  these  things  affect  also  American  business  in 
European  markets.  Many  of  our  customers  have  found  it  neces- 
sary to  approximate  their  methods  to  European  manufacturers' 
methods  in  doing  business  with  buyers  in  these  markets.  How 
export  business  of  this  sort  may  be  safely  and  profitably  con- 
ducted will  appear  in  the  course  of  later  chapters. 

OUR  SOUTH  AMERICAN  FIELDS 

The  exaggeration  in  the  minds  of  many  people  in  this  country 
of  the  relative  importance  to  us  of  South  American  markets  has 
already  been  noted.  Another  misconception  should  be  corrected. 
The  principal  markets  of  South  America,  namely,  Argentina  and 
Brazil,  are  not  "nearer  to  us"  than  they  are  to  European  ship- 
ping points.  Distances  from  New  York  to  Buenos  Aires  and 
Rio  de  Janeiro  are  practically  the  same  as  from  Liverpool  to  the 
same  points.  Nor  can  South  American  countries  be  said  to  be 
"our  logical  markets."  It  must  never  be  forgotten  that  the 
people  of  South  America  are  of  Latin  blood  and  Latin  taste, 
that  where  mere  questions  of  personal  preference  are  involved 
their  orders  will  go  to  Europe  rather  than  to  the  United  States. 


78  PRACTICAL  EXPORTING 

So  also  the  Englishman  everywhere  will  buy  English  goods  in 
preference  to  American.  This  must  by  no  means  be  construed 
to  imply  that  there  is  not  a  rich  and  highly  desirable  future  in 
store  for  our  trade  in  South  America.  It  does  mean,  however, 
that  that  trade  is  not  coming  to  us  without  an  effort  or  for  any 
reasons  of  sentiment  or  proximity.  We  shall  have  to  work  for  it 
and  cater  to  it.  And,  whatever  the  popular  impression  derived 
from  current  irresponsible  and  ignorant  discussion,  we  already 
enjoy  a  goodly  share  of  it  in  those  lines  in  which  we  are  at  pres- 
ent able  to  compete.  In  certain  textiles,  linen,  jute,  silk,  woolen 
and  cotton,  we  do  not  yet  rank  high  among  competitors  for  the 
world's  markets.  But  such  textiles  account  for  from  one-fifth  to 
one-quarter  of  Latin  America's  total  imports.  The  United  States 
have  hitherto  imported  a  large  part  of  our  own  requirements  of 
these  textiles,  even  many  cotton  specialties,  from  the  same  sup- 
pliers from  whom  Latin  America  has  bought. 

Exaggerated  Ideas  of  South  America. — Here  is  the  opinion  of 
a  man  who  least  of  any  one  can  be  accused  of  prejudice  against 
Latin  America — John  Barrett,  when  Director  General  of  the 
Pan  American  Union.  In  an  address  before  the  American  Hard- 
ware Manufacturers'  Association  he  declared  : 

"]\Ien,  posing  as  great  authorities,  are  filling  the  newspapers 
and  magazines  with  all  kinds  of  stories  about  this  field  south  of 
us,  and  causing  great  numbers  of  our  men  and  women  to  have 
exaggerated  and  improper  ideas  of  it  and  possibly  to  take  steps 
that  will  bring  them  misfortune  rather  than  reward.  It  is  neces- 
sary under  the  circumstances,  therefore,  that  a  strong  note  of 
counnon  sense  view  must  be  struck  in  this  situation. 

"New  publications  are  being  started  to  exploit  a  field  which 
has  already  been  exploited.  There  are  hundreds  of  men  to-day 
who  formerly  would  never  pay  the  slightest  attention  to  Latin 
America,  but  who  now,  suddenly  finding  that  the  Latin  American 
is  on  the  map,  think  that  they  have  discovered  for  the  first  time 
a  field  that  has  already  been  discovered  for  long  years !  Those 
are  the  ones  you  must  be  cautious  against.  In  contrast  to  them, 
remember  the  reliable  and  stable  sources  of  information. 

"Bear  in  mind  that  this  field,  while  great  and  wonderful  and 
extraordinary  in  many  respects,  is  no  Eldorado.  You  are  not  go- 
ing down  there,  you  or  your  representatives,  to  find  the  Latin 


MARKETS  FOR  AMERICAN  GOODS  79 

Americans  and  their  buyers  standing  there  with  outstretched 
hands  tilled  with  gold  to  purchase  anything  you  have  to  sell. 
But  it  is  a  good  time  either  to  go  there  yourself  or  to  send  men 
there  to  study  the  field  in  all  its  details,  to  become  intimately 
acquainted  with  the  conditions  of  demand  and  supply  and  compe- 
tition; to  establish  agencies  if  you  think  wise;  to  make  sales  if 
you  can ;  but  withal  to  master  the  environment,  the  inspiration, 
the  character,  the  history,  the  social  conditions  of  the  markets, 
in  order  that  you  may,  when  this  war  is  over,  be  in  a  position  for 
lasting  success  in  competition.  Any  advantage  that  you  might 
gain  at  the  present  moment,  but  that  you  could  not  follow  up 
when  the  war  is  over,  would  be  of  little  value  to  you.  .  .  . 

"There  is  nothing  that  really  wearies  my  heart  and  soul  more 
than  those  men  in  public  life,  those  editors,  and  those  super- 
ficial Avriters  and  observers  who  are  preaching  throughout  the 
country  that  the  United  States  is  doing  no  business  in  Latin- 
America  and  ought  to  capture  the  field,  as  if  it  did  not  already 
know  something  about  it.  Ladies  and  gentlemen,  last  year  the 
United  States  conducted  a  greater  foreign  trade  with  the  twenty 
countries  of  Latin-America  than  did  any  other  nation  on  the  face 
of  the  earth.  I  am  glad  you  applauded  that  statement,  because  a 
Congressman  the  other  day  became  angry  with  me  when  I  cor- 
rected his  error  of  statement  that  we  were  way  behind  in  Latin- 
American  trade.  He  seemed  to  be  sorry  to  learn  that  the 
United  States  had  that  record.  It  seemed  to  smash  all  his  ideas 
of  posing  as  a  discoverer  of  a  new  field." 

Sections  of  South  America  Considered.— ^It  is  perhaps  the 
West  Coast  of  South  America  that  has  been  most  subject  to  ex- 
aggeration as  to  its  present  and  future,  owing  to  the  improved 
facilities  for  reaching  that  coast  offered  by  the  Panama  Canal. 
The  countries  involved  include  Chile,  Peru,  Bolivia,  Ecuador  and 
the  Pacific  coast  of  Colombia.  Most  of  this  long  stretch  of  terri- 
tory is  a  narrow  and  arid  ribbon  between  the  Pacific  and  the 
Andes,  rising  only  a  few  miles  back  from  the  coast.  In  the  south 
the  climate  is  cold,  in  the  north  tropical.  None  of  these  countries 
is  largely  populated  and  in  all  of  them  a  large  percentage  of  the 
population,  as  .shown  by  statistics  or  estimates,  consists  of  native 
Indians.  Furthermore,  population  has  not  been  increasing  fast, 
nor  does  it  appear  from  any  indications  thus  far  discovered  that  a 


80  PRACTICAL  EXPORTING 

more  rapid  increase  is  probable  in  the  near  future.  It  is  by  no 
means  wise,  therefore,  to  exaggerate  trade  possibilities  on  the 
West  Coast. 

In  the  north,  Venezuela  and  Colombia  are  backward  in  every 
sense  of  the  word.  Development  can  hardly  be  said  to  have  been 
begun  as  yet,  while  political  conditions  are  characteristically  un- 
settled and  they,  as  well  as  local  regulations,  do  not  at  present 
promise  to  stimulate  the  growth  of  emigration  or  any  great  in- 
crease of  commerce. 

In  regard  to  Brazil  it  is  to  be  noted  that  the  northern  or 
Amaz,onian  districts  are  virtually  distinct  and  separate  from  the 
richer  and  more  prosperous  cities  in  the  southern  part  of  the  re- 
public. The  trade  of  Para  and  jManaos  is  practically  as  distinct 
from  the  trade  of  Rio  de  Janeiro  as  would  be  trade  in  another 
country.  It  is  almost  as  easy  and  certainly  quite  as  agreeable  for 
a  man  to  go  from  Rio  to  Europe  as  to  make  the  journey  from 
Rio  to  the  Amazon. 

CENTRAL  AMERICA  AS  A  MARKET 

In  Central  America  we  have  a  group  of  petty  republics  not  one 
of  them  boasting  a  total  population  larger  than  that  of  a  fourth- 
class  city  in  the  United  States.  Costa  Rica  and  Salvador  may 
be  said  to  possess  stable  governments,  and  Panama  under  the 
wing  of  the  United  States  must  keep  her  government  stable.  A 
similar  condition  cannot  be  said  to  maintain  in  the  remaining 
three  republics.  However,  all  the  Central  American  States  de- 
pend most  largely  for  their  supplies  on  the  United  States,  and 
probably  will  continue  to  do  so  in  increasing  ratio.  The  total 
volume  of  their  business  is  considerable  and  well  worth  having, 
but  after  all  it  is  only  a  drop  in  the  bucket  and  while  it  requires 
thought  and  attention  it  would  be  a  great  mistake  to  waste  too 
much  effort  on  it. 

Another  warning  is  here  in  order:  If  we  ought  not  to  ex- 
aggerate the  importance  of  our  export  trade  to  the  Latin  Ameri- 
can countries,  neither  must  we  underestimate  it.  Their  four 
or  five  principal  markets  hold  out  most  attractive  possibilities  to 
our  commerce  and  each  one  of  the  others  should  receive  its  ap- 
propriate and  due  share  of  attention. 


MARKETS  FOB  AMERICAN  GOODS  81 

MEXICO,  CUBA  AND  THE  WEST  INDIES 

When  Mexico  was  at  peace  with  herself  she  bought  consider- 
ably more  than  half  of  her  total  supplies  from  us  in  the  United 
States.  This  was  the  entirely  natural  consequence  of  proximity 
and  frequent  and  quick  inter-communication,  to  say  nothing  of 
certain  American  influences  which  have  made  themselves  felt  in 
Mexico  partly  because  of  the  same  proximity  and  partly  through 
the  presence  on  Mexican  soil  of  thousands  of  citizens  of  the 
United  States  and  the  investment  there  of  many  millions  of 
American  dollars.  Mexico  is  again  becoming  a  large  and  a 
valued  customer  of  ours.  Our  position  in  her  markets  will  prob- 
ably be  strengthened  and  improved. 

Cuba  is  already  the  most  important  Latin  American  market  we 
have.  The  island  has  bought  from  us  more  than  twice  as  much 
as  either  Mexico,  Argentina  or  Brazil  has  ever  bought.  Our 
trade  has  been  fostered  not  only  by  the  nearness  of  Havana  to 
New  York,  Key  West  and  New  Orleans,  by  many  an  innovation 
introduced  during  the  American  interventions  following  the 
Spanish-American  War,  by  a  small  but  a  noticeable  number  of 
American  residents  in  Cuba,  but  also  by  the  preference  in  Cuban 
duties  in  favor  of  goods  of  the  United  States,  amounting  in  most 
instances  to  about  20  per  cent.  Despite  the  considerable  share 
we  have  secured  in  Cuban  business  there  still  remain  numberless 
opportunities  for  expanding  our  trade  and  many  and  many  an 
American  article  which  might  profitably  and  largely  be  intro- 
duced is  at  present  unknown. 

Our  own  possession,  the  island  of  Porto  Rico,  is  much  smaller 
than  Cuba  and  by  no  means  naturally  so  rich.  American  goods 
entering  Porto  Rico  free  of  duty  have  naturally  assumed  the  pre- 
ponderant share  in  the  island's  imports.  Both  Haiti  and  Santo 
Domingo  have  been  so  unsettled  politically  in  recent  years  that 
commerce  has  suffered  and  even  improvements  projected  by 
American  capitalists  have  been  abandoned,  temporarily  it  may  be 
hoped,  especially  in  view  of  the  existing  American  protectorates. 
The  greater  part  of  the  trade  of  both  republics,  however,  comes 
and  will  continue  to  come  to  us. 

With  the  exception  of  Jamaica,  the  same  condition  of  trade 


82  PRACTICAL  EXPORTING 

cannot  be  said  to  characterize  the  remainder  of  the  West  Indies, 
especially  the  British  islands,  which  are  those  most  important 
commercially.  Although  small  markets,  much  more  might  be 
done  to  develop  our  trade  with  them  and  the  character  of  that 
trade  and  its  stability  should  encourage  such  effort's. 

AUSTRALASIAN  MARKETS 

New  Zealand,  Australia  and  Tasmania,  which  (with  certain 
other  British  possessions  in  the  South  Seas)  are  grouped  to- 
gether in  the  term  Australasia,  continue  as  for  years  past  to  be 
good  customers  for  American  wares.  In  some  respects  the  peo- 
ple of  these  British  Colonies  more  nearly  approximate  Ameri- 
cans than  do  any  others.  Commerce  is  concentrated  at  a  few 
points.  In  Australia  the  trade  of  each  of  the  States  of  the 
Commonwealth  is  tributary  to  the  capital  of  that  State.  While 
there  are  a  few  other  important  cities,  it  is  in  Sydney  and  Mel- 
bourne that  the  bulk  of  the  import  trade  for  the  whole  Common- 
wealth is  centered.  In  New  Zealand  there  is  no  one  city  pre- 
dominating in  population  or  commercial  importance,  but  Auck- 
land, Wellington,  Christchurch  and  Dunedin  are  the  principal 
points.  Australasia  does  not  grow  fast  in  population  nor  have 
efforts  to  develop  manufacturing  industries  been  generally  or 
conspicuously  successful.  It  is  essentially  an  importing  market. 
Per  capita  purchases  of  goods  from  oversea  are  exceptionally 
large,  New  Zealand's  probably  larger  than  those  of  any  other 
country.  The  field,  therefore,  is  an  exceedingly  fertile  one.  The 
author  when  last  visiting  these  colonies,  in  1917,  found  them  won- 
derfully prosperous  and  the  share  of  the  United  States  in  their 
trade  is  certain  to  be  much  larger  in  the  future  than  heretofore. 
The  personal  and  trade  characteristics  of  those  markets  should 
commend  them  especially  to  the  cultivation  of  American  manu- 
facturers. 

THE  MARKETS  OF  AFRICA 

The  South  African  Union  is  comparable,  so  far  as  the  people 
are  concerned,  to  Australasia.  The  trade,  however,  is  of  some- 
what different  character  for,  of  course,  a  great  share  of  the  pros- 
perity of  the  Union  depends  upon  the  rich  and  famous  mines  of 


MARKETS  FOR  AMERICAN  GOODS  83 

the  Transvaal,  centering  at  Johannesburg.  It  is  only  in  recent 
years  that  agriculture  has  made  any  notable  progress  and  its 
development  is  still  much  inferior  to  that  of  Australia.  No 
doubt  is  expressed  in  any  quarter  as  to  the  future  of  the  South 
African  Union.  Its  rise  in  population  is  likely  to  be  slow  but 
its  trade  will  continue  considerable,  as  it  is  of  highly  satisfactory 
and  stable  character.     Our  share  in  it  ought  to  be  much  larger. 

The  several  colonies  established  by  the  various  nations  of 
Europe  on  the  East  Coast  and  the  West  Coast  of  Africa  call  at 
present  for  no  comment  here  and  little,  if  any,  attention  on  the 
part  of  manufacturers.  In  the  north  of  the  African  continent, 
Morocco,  Algeria  and  Tunis  are  subject  to  all  the  restrictions  of 
the  French  customs  tariff,  and  in  many  instances  it  is  preferable 
to  develop  trade  in  these  markets  through  houses  having  head- 
quarters in  France.  Tripoli,  lately  acquired  by  Italy,  is  un- 
known commercially. 

Eg3^pt,  on  the  other  hand,  is  an  important  and  desirable  market 
to  which  we  of  the  United  States  have  hitherto  paid  far  too  little 
attention.  Despite  the  mixture  of  races  to  be  found  in  the  com- 
mercial communities  of  Egypt  and  the  consequent  and  extreme 
care  necessary  in  establishing  and  carrying  on  trade,  the  laws 
provided  through  British  influence  are  sound.  There  are  several 
important  cities  which  offer  a  considerable  and  a  promising  trade, 
whether  or  not  the  great  hinterland  of  Egypt,  the  Soudan,  ever 
develops  to  its  anticipated  importance. 

TRADE  WITH  THE  ORIENT 

The  remaining  principal  commercial  markets  of  the  world  we 
may  group  together  as  the  Orient,  includipg  under  this  head 
Japan,  China,  the  Philippines,  British  India,  the  Dutch  East 
Indies,  Siam,  etc. 

Our  Japanese  Market. — Japan  will  undoubtedly  continue  for 
many  years  to  come  to  be  at  least  equality  as  important  a  market 
for  American  goods  as  in  recent  years.  It  may  be  possible,  how- 
ever, that  the  character  of  our  exports  to  Japan  will  change  to 
some  extent,  that  we  may  find  demanded  an  increasing  propor- 
tion of  what  are  called  "manufactures  for  further  use  in  manu- 
facturing." It  would  not  be  surprising  if  this  is  the  case  in 
view  of  the   advancement  of  Japan's  national  manufacturing 


84  PRACTICAL  EXPORTING 

industries.  None  the  less,  if  western  influence  continues  to  af- 
fect Japan,  it  is  certain  that  no  more  than  other  manu- 
facturing nations  can  she  be  equal  to  the  supply  of  all 
sorts  of  goods  demanded  by  modern  civilization.  There  is  no 
more  reason  why  Japan  should  be  self-sufficient  than  that  Eng- 
land or  the  United  States  should  be  so.  Those  commentators  on 
international  commerce  who  see  no  future  in  Japan  for  the  trade 
of  any  other  country  may  perhaps  forget  this  aspect. 

China's  Trade. — The  future  of  China  is  as  yet  too  undeter- 
mined to  make  safe  any  predictions  as  to  the  course  the  commerce 
of  that  great  new  republic  will  take.  For  the  moment  the  in- 
tricate systems  of  railway  development  so  urgently  demanded, 
which  have  for  a  number  of  years  been  planned,  seem  to  be  held 
in  abeyance  awaiting  internal  political  and  external  diplomatic 
events.  There  are  many  reasons  why  American  imports  should 
be  especially  favored  in  China.  It  is  even  probable  that  al- 
though our  Governmental  support  was  withdrawn  from  pro- 
posals of  American  capitalists  to  participate  in  Chinese  railway 
construction,  yet  our  money  and  our  engineers  will  ultimately  be 
found  taking  some  share  in  the  development  of  that  vast  terri- 
tory. In  any  case,  it  would  seem  that  an  increase  in  our  trade 
with  its  hundreds  of  millions  of  inhabitants  is  morally  certain  to 
result. 

At  present  most  international  trade  is  carried  on  through 
great  commercial  houses  located  at  a  few  Chinese  ports,  notably 
at  Shanghai.  Hong  Kong,  another  great  distributing  center, 
while  practically  on  Chinese  territory,  is,  it  will  be  remembered,  a 
British  possession.  It  may  rank,  however,  as  a  Chinese  port  in  a 
consideration  of  trade  with  China.  Of  course,  it  must  not  be 
forgotten  that  among  other  variations  in  the  trade  of  this  enor- 
mous country  that  of  climate  is  especially  to  be  noted.  The 
south  of  China  is  hot,  the  north  cold.  There  is  very  much  the 
same  difference  between  the  climate  of  Shanghai  and  that  of 
Peking  as  between  New  Orleans  and  New  York. 

The  Philippine  Islands. — Our  American  possessions  in  the  Far 
East,  the  Philippine  Islands,  have  been  profitable  investments,  at 
least  in  a  commercial  way.  No  doubt  our  Government  ought  to 
do  a  good  deal  more  for  the  islands  than  it  has  accomplished  or 
offered  to  do  thus  far.     But  the  institution  of  free  trade  in 


MARKETS  FOR  AMERICAN  GOODS  85 

American  goods  has  resulted  in  bringing  to  us  a  large  part  of 
the  business  that  formerly  went  to  Europe,  There  still  remains 
a  goodly  share  of  other  business  which  we  ought  to  be  able  to 
secure — in  fact,  British  and  other  European  traders  have  ex- 
pressed amazement  that  we  have  not  obtained  a  larger  share 
hitherto.  Besides  American,  there  are  large  business  houses  in 
Manila  of  sundry  nationalities — English,  Spanish,  etc.,  dating 
from  before  our  annexation  of  the  islands. 

Possibilities  in  British  India. — British  India,  it  will  surprise 
many  Americans  to  know,  is  the  second  largest  market  for  Eng- 
lish goods.  England  counts  the  United  States  as  its  biggest 
market  but  British  India  comes  immediately  after  the  United 
States,  as  more  important  than  Germany  ever  was,  or  any  other 
country  or  British  Colony  in  the  world.  This  is  largely  because 
of  the  great  British  cotton  piece-goods  trade.  Every  man, 
woman  and  child  of  the  350,000,000  inhabitants  of  India  wears  a 
little  piece  of  cotton  cloth,  if  nothing  else.  In  much  of  this 
particular  trade  we  of  the  United  States  for  certain  reasons  are 
not  just  now  fitted  to  compete,  but  there  are  hundreds  of  Ameri- 
can lines  which  could  be  and  which  ought  to  be  largely  sold 
throughout  India,  Nine-tenths  of  our  manufacturers  appear  to 
have  entirely  overlooked  this  market.  Few  even  of  our  profes- 
sional export  merchants  have  given  attention  to  it. 

The  manufacturer  or  exporter  must,  however,  note  a  marked 
characteristic  which  distinguishes  the  trade  of  India  and  of  East 
Indian  markets  in  general.  There  is  the  native  or  bazar  trade, 
and  there  is  the  entirely  distinct  and  separate  trade  of  British 
or  other  European  shops.  In  Bombay,  Calcutta,  Madras,  Ran- 
goon and  other  important  cities,  the  high  class  retail  trade  cater- 
ing to  Europeans  and  Eurasians  is  conducted  by  British  or  other 
European  firms.  These  firms  do  not,  as  a  rule,  buy  from  local 
importers,  certainly  never  from  a  native  agent.  Nor  do  the 
thousands  of  European  residents  buy  their  supplies,  except  green 
groceries,  from  native  dealers.  On  the  other  hand,  if  it  is  de- 
sired to  reach  the  great  native  population  then  goods  must  be 
sold  through  native  shops  and  in  the  bazars.  This  result  may  be 
sought  through  the  intermediary  of  great  wholesale  import 
houses  who  may  be  either  of  European  or,  less  frequently,  of  na- 
tive origin.     These  general  importers  do  not  and  cannot  supply 


86  PRACTICAL  EXPORTING 

the  high  class  ''white"  shops.  They  depend  on  the  enormous 
number  of  native  establishments  whose  orders  they  seek,  either 
carrying  extensive  stocks  as  wholesale  merchants  or  bringing  out 
on  special  indents  goods  as  ordered  by  their  customers  from 
samples.  The  manufacturer  who  has  goods  suited  both  for  Euro- 
pean trade  and  native  trade  must,  therefore,  adopt  two  different 
means  of  introducing  these  goods  in  India. 

SOME  FOREIGN  PRACTICES  STRANGE  TO  US 

Do  not  fancy  that  because  at  home  we  do  things  in  this  or 
that  way  other  countries  must  also  do  them  in  the  same  way. 
The  chances  are  rather  in  favor  of  their  doing  them  differently. 
Many  of  our  systems,  politics,  laws,  like  our  tariff,  are  our  own. 
Other  lands  have  their  own.  Our  dollar  is  not  known  in  every 
other  foreign  country.  There  is  many  a  millionaire  foreign 
merchant  who  does  not  speak  or  read  a  word  of  English.  It 
should  be  our  part  before  embarking  seriously  on  an  export 
campaign  to  learn  as  much  as  possible  about  practices  in  vogue 
in  .foreign  countries.  Something  can  be  accomplished  at  the 
very  outset  and  our  knowledge  will  be  constantly  extended  as 
our  experience  grows.  This  is  one  of  the  broadefting  features  of 
export  trading  which  should  help  us  in  every  aspect  of  social  no 
less  tiiau  business  relations. 

Our  Ways  Different. — Other  peoples  do  not  invariably  think 
and  act  just  as  do  Americans  and  we  ought  to  be  glad  of  it, 
for  the  gaiety  of  nations  is  thereby  multiplied  a  hundredfold. 
■The  M^orld  would  be  a  mighty  humdrum  sort  of  place  did  each 
member  of  our  own  community  think  and  act,  even  dress,  exactly 
as  do  his  neighbors.  In  business  it  is  to  our  interest  to  consider 
our  friends'  characteristics  and  to  cater  to  their  idiosyncrasies. 

The  Japanese  governor  of  the  Province  of  Yokohama  has  just 
issued  an  order  to  its  citizens  (an  old  letter  says)  in  the  course 
of  which  they  are  instructed  that  "foreigners'  ages  should  not  be 
asked,  except  in  case  of  absolute  necessity."  It  is  often  so  easy 
to  avoid  offending  foreigners,  often  such  a  simple  matter  to  do 
things  in  the  right  way,  the  way  that  will  please.  Nothing  used 
to  offend  a  merchant  in  the  Austrian  capital  more  than  to  receive 
letters  addressed  Vienna,  "Germany."     A  customer  in  Warsaw 


MARKETS  FOR  AMERICAN  GOODS  87 

always  preferred,  before  national  independence,  to  be  addressed 
"Russian  Poland"  instead  of  "Russia." 

English  as  Spoken  in  England. — We  do  not  use  the  English 
language  in  just  the  same  way  that  that  language  is  used  in 
Great  Britain  and  the  British  Colonies.  We  call  almost  every 
sort  of  a  place  of  business  in  this  country  a  "store,"  but  in  Eng- 
land smaller  and  practically  all  retail  establishments  are  usually 
called  "shops" — "store"  being  considered  in  its  first  signification 
of  a  warehouse  and  its  application  restricted  to  very  large  estab- 
lishments, in  the  retail  trade  chiefly  to  some  department  stores. 
We  have  in  this  country  what  we  call  the  "shirt  Waist"  but, 
when  one  stops  to  think  about  it,  "waist"  is  not  properly  an 
article  of  wearing  apparel.  The  garment  might  far  more  prop- 
erly be  called  by  its  English  and  French  name,  "blouse."  Of 
course,  no  other  people  than  our  own  confuse  the  terms  "pants" 
and  "trousers."  The  use  of  "vest"  as  indicating  a  waistcoat 
instead  of  an  undershirt,  is  fortunately  falling  out  of  fashion 
even  in  the  United  States.  We  use  the  verb  "to  fix"  in  all  sorts 
of  senses,  particularly,  to  remedy,  repair  or  arrange,  but  in 
England  its  use  is  restricted  to  its  primary  meaning,  to  fasten  or 
to  affix. 

Many  trade  terms  are  similarly  used  in  quite  other  senses  in 
the  United  States  than  in  foreign  countries.  What  in  the 
United  States  is  known  as  a  lumber  dealer  is  called  in  England 
a  timber  merchant.  The  American  wrench  is  more  commonly 
called  "spanner"  by  British  engineers  and  machinists  every- 
where. We  use  indiscriminately  the  words  boots  and  shoes. 
Not  so  among  the  English,  where  shoes  is  used  only  to  indicate 
low  cut  articles  of  footwear.  A  boot  is  what  we  call  a  buttoned 
or  laced  high  cut  shoe.  Another  illustration  which  the  present 
author  has  frequently  used  of  the  exact  reversal  of  trade  terms 
in  the  United  States,  is  the  use  in  our  boot  and  shoe  trade  of  the 
ranges  of  sizes  called  respectively  boys  and  youths.  In  this 
country  youths'  sizes  run  from  lis  to  2s,  boys'  from  2i,/>  to  51^. 
In  England  the  practice  is  the  reverse  of  this  and  the  English 
seems  to  be  more  appropriate,  since  a  youth  is  certainlj^  older 
than  a  boy. 

There  might  be  a  subject  here  for  a  large  and  rather  interesting 


88  PRACTICAL  EXPORTING 

book,  but  in  any  event  it  should  be  clear  that  when  we  are 
doing  business  with  British  customers  there  will  be  nothing  lost 
in  conforming  our  language  to  theirs  no  matter  how  thoroughly 
Yankee  we  may  feel.  If  we  write  ' '  Your  favour  received, ' '  using 
the  customary  English  spelling  of  the  word  we  spell  "favor,"  no 
harm  certainly  will  be  done,  while  we  may  thus  successfully  in- 
dicate to  our  correspondents  that  we  are  familiar  with  their  own 
practice.^ 

Jobbing  Houses  Abroad. — A  good  many  American  manu- 
facturers in  expressing  a  wish  to  establish  an  export  trade  de- 
clare that  they  only  intend  to  do  business  with  "jobbers."  As 
a  matter  of  fact  jobbers,  as  we  know  them,  do  not  exist  in  great 
numbers  in  any  foreign  country.  The  function  of  the  Ameri- 
can jobber  is  performed  by  houses  of  slightly  different  character 
in  most  other  lands.  The  one  notable  exception,  the  trade  in 
which  what  we  call  jobbers  exist  almost  everywhere,  is  in  the 
piece-goods  business.  When  we  go  abroad  we  shall  find  in  all 
countries  great  establishments  piled  high  with  cotton  or  woolen 
goods.  There  are  houses  in  England  which  we  should  call 
hardware  jobbers  or  shoe  jobbers.  There  are  some  in  Australia. 
Usually,  however,  in  foreign  countries  big  houses  which  may  be 
wholesalers  are  retail  dealers  as  well,  for  although  they  supply 
some  small  local  establishments  and  some  country  trade,  yet  as 
retailers  they  enter  into  immediate  competition  in  their  own 
city  with  other  similar  establishments.  This  is  especially  true 
throughout  Latin  America.  For  example,  one  of  the  largest 
houses  in  the  Argentine  Republic  imports  lumber,  machinery, 
agricultural  implements,  hardware,  office  desks,  furniture,  and 
other  goods.     It  does  a  big  wholesale  business,  but  it  also  retails 

1  The  advice  of  a  prominent  representative  of  the  hardware  trade,  E. 
C.  Simmons,  of  the  Simmons  Hardware  Company,  St.  Louis,  is  worthy 
of  note.  "To  suecessfully  do  business  with  any  people,  you  must  not  only 
understand  them  and  sympathize  with  them,  but  you  must  likewise  look 
at  all  tilings  from  their  point  of  view.  Nothinoj  in  the  world  is  so  edu- 
cational and  so  illuminating  as  to  get  and  consider  the  other  fellow's 
point  of  view.  We  have  too  much  of  that  Anglo-Saxon  pride  of  race 
which  regards  itself  as  superior  to  other  people,  when  in  truth  it  would 
be  much  better  from  all  points  of  view,  much  more  kindly,  much  more 
charitable,  much  more  profitable,  and  often  more  in  accordance  with  facts, 
to  merely  rank  them  as  different,  rather  than  attempt  to  institute  any 
comparison  as  to  superiority,  or  the  reverse." 


MARKETS  FOR  AMERICAN  GOODS  89 

gocds  through  its  branches  in  Buenos  Aires,  Rosario,  etc.  It 
cannot,  therefore,  be  regarded  as  a  jobber  in  a  position  to  sell 
competing  retail  houses  in  these  cities.  On  the  Continent  of 
Europe  there  are  comparatively  few  jobbing  houses  because  of 
the  established  custom  of  direct  dealings  from  factory  to  re- 
tailer. 

Indent  Merchants. — In  general  the  position  of  the  American 
jobbing  house  is  usually  taken  in  other  countries  either  by  the 
general  importer  or  by  the  local  commission  agent.  The  gen- 
eral importer  may  be  either  a  merchant  on  his  own  account  or  he 
may  be  purely  an  indent  merchant.  In  the  first  case  he  buys 
goods  that  may  appeal  to  him,  puts  them  in  stock  and  sells  them 
to  retailers  as  occasion  may  offer.  If  he  imports  strictly  on 
indent,  he  usually  solicits  orders  from  the  trade  on  the  basis  of 
sample  or  catalogue  and  in  due  course  despatches  an  order  to 
the  manufacturer  or  other  supplier  abroad  for  the  aggregate 
quantities  of  different  kinds  of  goods  for  which  he  has  re- 
ceived indent  orders  from  his  local  customers.  When  these 
goods  are  received  the  respective  quantities  are  apportioned 
among  his  customers  who  have  entrusted  him  with  their  indents. 
In  these  cases  the  importer  himself  may  but  usually  does  not 
carry  stocks  of  his  own  in  addition  to  the  indent  business  just 
described.  Not  only  do  these  general  importers  carry  on  busi- 
ness in  a  great  many  different  branches  but  there  are,  and  again 
especially  in  Latin  America,  a  great  many  more  general  retail 
shops  still  existing  than  is  usual  in  the  United  States  where,  as 
in  Europe,  trade  has  become  more  highly  specialized. 

Women  in  European  Business  Life. — It  may  be  worth  noting 
at  this  place  that  in  other  countries  retail  establishments  dif- 
fer from  ours  in  respects  which  the  American  seeking  orders 
from  them  should  bear  in  mind.  Women  are  by  no  means  un- 
known here  in  the  United  States  as  heads  of  departments  and 
even  as  proprietors  of  their  own  shops.  But  in  Europe  espe- 
cially, the  wife  is  more  commonly  than  not  her  husband's  assist- 
ant in  his  shop,  sometimes  as  a  clerk,  very  often  as  cashier.  No 
visitor  to  a  shop  on  the  Continent  of  Europe  will  make  a  mis- 
take in  saluting  the  cashier  qu  entering  the  shop  and  in  always 
treating  with  great  deference  her  who  appears  to  be  the  pro- 
prietor's helpmate  in  ways  that  are  comparatively  rare  in  our 


90  PRACTICAL  EXPORTING 

own  country.  If  she  does  not  "wear  the  trousers"  she  may  yet 
exercise  a  potent  influence  in  advising  her  lord  and  master  as  to 
his  orders.  In  Europe,  too,  perhaps  as  a  consequence  of  condi- 
tions just  explained,  a  widow  much  oftener  carries  on  the  busi- 
ness of  her  dead  husband  than  follows  the  American  practice  of 
selling  it  out  or  closing  it  up.  Hence  we  find  the  many  firm 
names  beginning  with  veuve  or  vmda,  the  French  and  Spanish 
words  for  the  English  "widow." 

' '  One  Price  Only. ' ' — One  price  to  all,  or  as  the  French  put  it 
prix  fixe  or  the  Germans  feste  Preis,  is  a  principle  more  honored 
in  the  breach  than  in  the  observance  in  almost  every  foreign 
country,  excepting  only  Great  Britain  and  the  British  Colonies. 
Possibly  there  are  some  of  the  great  retail  establishments  in 
Paris  or  Berlin  where  bargaining  over  the  price  of  goods  is  not 
possible,  but,  in  principle,  in  the  retail  shops  of  the  Continent  of 
Europe  as  throughout  the  Orient  and  in  Latin  America,  bar- 
gaining is  the  rule  even  where  "one  price  only"  is  advertised. 
This  inevitably  affects  the  attitude  of  the  proprietors  of  shops 
toward  traveling  salesmen  who  offer  them  goods.  The  buyers 
expect  to  bargain  over  the  prices  named  by  the  salesmen.  They 
have  to  do  so  in  the  case  of  European  salesmen.  The  American 
sometimes  has  difficulty  in  persuading  his  prospect  that  this  is 
not  an  American  custom  and  that  the  prices  named  are  the  only 
ones  he  has  to  offer. 

However,  our  manufacturers  in  taking  up  the  export  trade 
will  be  well  advised  if  they  do  not  carry  too  far  our  national 
principle  of  one  price  to  all.  It  will  be  found  far  better  to 
graduate  prices  for  export  in  one  way  or  another.  There  are  a 
good  many  contingencies  to  be  provided  for.  While  this  sub- 
ject will  be  taken  up  again  in  the  course  of  later  chapters  yet 
for  the  present  it  should  here  be  noted  that  the  principle  of  one 
price  to  all  is  not  regarded  by  most  authorities  as  that  which 
should  govern  export  trade  relations. 

Formality  in  Business  Abroad. — In  most  foreign  countries, 
but  above  all  throughout  Europe,  a  good  deal  more  formality  is 
usually  shown  in  business  relations  than  we  are  accustomed  to 
in  the  United  States.  Orders  are'  contracts  and  are  usually 
signed  both  by  the  buyer  and  seller,  or  by  the  latter 's  repre- 
sentative,    A  sample  is  a  sample,  and  whenever  possible  is  re- 


MARKETS  FOR  AMERICAN  GOODS  91 

tained  by  the  buyer  for  comparison  -with  the  goods  ultimately 
delivered.  The  general  principle  of  formality  may  be  illus- 
trated in  the  custom  of  always  initialing  any  changes  or  inter- 
lineations in  a  letter  or  a  copy  of  a  document.  So  in  England, 
where  carbon  copies  of  correspondence  are  used  for  filing,  great 
care  is  taken  that  all  changes  in  such  carbon  copies  are  identical 
with  the  original  and  each  carbon  copy  is  initialed  by  its  writer 
before  it  is  admitted  into  the  files. 

The  language  emplo^'ed  in  foreign  correspondence  should  al- 
ways be  exact  as  well  as  formal  and  dignified.  Above  all  things 
American  slang  must  be  strenuously  excluded.  Grammatical 
English  must  at  least  be  employed  when  we  write  in  our  own 
language.  Yet  it  is  a  mistake  to  suppose  that  foreign  business 
men  are  either  better  educated  or  are  better  business  men  than 
are  we.  The  proportion  of  selfmade  men  to  be  found  in  the 
business  communities  of  Europe  is  another  surprise  for  those 
of  us  who  have  been  accustomed  to  fancy  that  successful  business 
men  of  this  stamp  are  more  common  in  the  United  States. 

FOREIGN  CURRENCIES 

It  is  essential  that  the  exporter  familiarize  himself  with  the 
various  monetary  systems  of  foreign  countries,  for  contraiy  to 
what  some  of  us  would  like  to  believe,  the  American  dollar  is  not 
universally  known  or  understood.  Yet  the  use  of  foreign  de- 
nominations of  money  should  be  absolutely  restricted  to  a  few 
of  the  great  standard  currencies  of  the  world.  Certainly  no 
transactions  wdiatsoever  should  be  attempted  in  the  currencies  of 
countries  where  a  silver  or  paper  basis  prevails  and  exchange 
rates  are,  therefore,  constantly,  sometimes  daily  fluctuating. 
This  is  the  chronic  state  of  affairs  in  almost  every  country  of 
Latin  America  (Venezuela,  Uruguay,  Peru,  Cuba  and  Costa  Rica 
are  notable  exceptions),  and  also  in  Spain  and  Portugal. 

The  English  Pound  Sterling. — The  first  essential  in  a  knowl- 
edge of  foreign  moneys  is  to  learn  the  British  or  sterling  system. 
The  pound  sterling  is  divided  into  20  shillings,  each  shilling  into 
12  pence.  The  actual  gold  value  of  the  pound  is  approximately 
$4.87.  Its  exchange  value  in  normal  times  varies,  of  course, 
according  to  the  balance  of  trade  between  our  country  and 
Great  Britain,  that  is,  when  we  are  shipping  more  goods  to  Great 


92  PRACTICAL  EXPORTING 

Britain  than  we  are  buying  from  her  or  Great  Britain  for  some 
reason  owes  us  more  money  than  we  owe  her,  the  value  in  this 
country  of  the  pound  is  less  than  when  conditions  are  the  re- 
verse and  we  have  been  buying  more  British  goods  than  the 
value  of  American  goods  shipped  to  Great  Britain.  Bankers  in 
New  York  may  accordingly  quote  exchange  on  London  at  all  the 
way  from  $3.17  up  to  $6.00,  both  limits  being  extraordinary 
figures  brought  about  by  the  European  War.  The  gold  points, 
v/hen  v/e  export  or  import  specie,  usually  are  approximately 
$4.84  and  $4.88.  For  ready  calculation  the  pound  may  be  called 
worth  $4.80  in  normal  times.  This,  of  course,  will  perhaps  never 
be  exact  and  should  not  be  depended  upon  in  any  close  calcula- 
tions, but  for  general  estimates  it  is  easy  to  remember  and  is  a 
ready  basis  for  converting  English  money  into  American  or  vice 
versa,  when  exchange  again  becomes  normal. 

On  the  basis  of  $4.80  to  the  pound  each  one  of  the  20  shillings 
which  make  up  that  pound  is  worth  24  cents  and  each  one  of  the 
12  pence  which  make  one  shilling  is  worth  2  cents.  If,  there- 
fore, we  have  the  sum  of  say  £50.  12.  6.  to  convert  into  terms  of 
American  money,  we  shall  multiply  £50  by  4.80,  obtaining  $240 ; 
the  shillings  at  24  cents  each  will  reduce  to  $2.88,  and  the  6 
pence  at  2  cents  each  resulting  in  12  cents,  would  give  us  a  total 
of  $243.  as  the  equivalent  of  £50.  12.  6.  The  reverse  operation 
is  thus  performed :  Suppose  we  have  the  sum  of  $250  to  convert 
to  its  approximate  equivalent  in  pounds,  shillings  and  pence. 
About  the  easiest  way  of  performing  the  operation  is  to  call  the 
$250  25,000  cents  ($250.00)  ;  dividing  by  2  cents  to  the  English 
penny  we  have  12,500  pence;  dividing  this  amount  by  12  pence 
to  the  shilling  we  have  1,041  shillings  and  8  pence.  The  shill- 
ings are  in  turn  divided  by  20,  being  the  number  of  shillings  to 
the  pound,  and  we  have  a  final  result  of  £52.  1.  8.  as  the  equiva- 
lent of  $250  at  this  nominal  exchange  rate  of  $4.80  to  the  pound. 
Of  course,  this  operation  can  be  performed  in  a  number  of  differ- 
ent ways  but  the  foregoing  will  be  found  by  many  the  easiest 
and  simplest,  as  soon  as  the  pound  resumes  its  old  value. 

It  should  be  remembered  that  as  the  British  S3^stem  is  not  on 
the  decimal  basis,  what  we  should  call  "even  money"  parts  of 
the  various  denominations  are  a  little  strange  to  us.  Thus  frac- 
tions of  a  pound  or  of  a  shilling  are  popularly  on  the  basis  of 


MARKETS  FOR  AMERICAN  GOODS  93 

quarters  or  eighths.  Ten  shilliugs  (half  a  pound),  5  shillings 
(quarter  of  a  pound),  2  shillings  6  pence  (2i/2  shillings,  one- 
eighth  of  a  pound)  are  used  where  we  would  use  even  dollar 
terms:  So  in  regard  to  the  fractions  of  a  shilling,  9  pence 
(three  quarters  of  a  shilling),  6  pence  (half  a  shilling),  3  pence 
(quarter  of  a  shilling),  are  used  where  we  should  employ  nickels, 
dimes  and  quarters.  As  of  passing  interest  it  may  be  noted  that 
the  English  pound  sterling  sign  (£)  is  the  initial  for  the  Latin 
libra  (pound).  The  abbreviation  of  the  shilling  is  the  letter  s., 
the  Latin  solidus  which  became  the  German  schilling;  that  of  the 
penny,  d.,  represents  the  Latin  word  for  penny,  denarius. 

French  Money. — The  French  money  system  is  based  on  the 
franc  divided  into  IQO  centimes.  The  gold  value  of  the  franc  in 
American  money  is  19.3  cents.  Its  exchange  value  with  New 
York  banks  varies  as  does  that  of  English  currency,  already  ex- 
plained, and  in  fact  every  other  currency  dealt  in  on  the  New 
York  exchange  market.  For  purposes  of  ready  conversion  in  a 
rough  way  the  franc  may  be  called  worth  20  cents  of  our  money 
and  each  centime  will  then,  of  course,  be  worth  ^lootb  of  20 
cents,  or  one-fifth  of  a  cent.  Single  centimes  are,  however, 
rarely  employed  in  business  with  France.  The  currency  being 
like  ours  on  a  decimal  basis,  5  centimes  (the  equivalent  of  one 
American  cent)  is  the  customary  minimum.  We  should  not 
quote  our  prices,  therefore,  at,  for  example,  Francs  6.27  but  we 
should  either  make  it  Fes.  6.30  or  Fes.  6.25. 

It  should  be  noted  that  in  quoting  French  exchange  bankers 
employ  a  different  system  than  is  customary  in  the  case  of 
British  currency.  Instead  of  stating  the  amount  in  American 
money  which  the  French  unit  is  taken  as  representing  on  a  given 
day,  the  equivalent  of  $1  in  French  currency  is  quoted.  Thus, 
we  may  find  bankers'  exchange  rates  fluctuating  from  say  5.15 
to  17.00  (war  extremes),  meaning  that  $1  is  worth  on  the  day 
of  quotation  either  Fes.  5.15  or  Fcr..  17.00,  as  the  case  may  be. 
In  a  general  way  5.20  to  the  dollar  may  be  taken  as  a  rough 
basis,  if  and  when  exchange  returns  to  its  pre-war  status. 

German  Currency. — German  currency,  like  the  French,  is 
based  on  the  decimal  system,  the  unit  being  the  Mark  divided  into 
100  Pfennige  (abbreviated  pf.).  The  mark  having  a  coin  value 
of  23.8  cents  was  formerly  called  worth  24  cents  for  general 


94  PRACTICAL  EXPORTING 

calculation  purposes  and  denominations  in  pfennige  usually 
•  progress  by  5s.  and  10s.  as  in  the  case  of  francs.  Exchange  rates 
in  marks  used  to  be  quoted  by  bankers  on  yet  another  system  than 
that  noticed  in  the  case  of  British  and  French  currencies. 
When  we  read  in  newspaper  reports  of  the  exchange  market  that 
marks  were  quoted  at  941/^  it  meant  that  four  marks,  which  had 
been  established  as  the  basis  for  such  quotations,  were  called 
worth  on  the  day  of  quotation  941/4  cents.  Rates  before  the 
war  fluctuated  according  to  the  law  of  supply  and  demand  as 
applying  to  money  required  in  the  United  States  or  Germany, 
from  9-41/4  to  95%.  It  may  be  noted  that  in  a  rough  way  the 
value  of  the  mark  was  called  the  equivalent  of  tlie  English  shill- 
ing. After  the  war  the  mark  fell  so  low  (1  cent)  that  quota- 
tions are  now  made  in  cents  joer  mark. 

Other  European  Moneys. — An  easy  way  of  remembering  the 
value  of  some  other  common  currencies  is  to  note  the  coun- 
tries, mostly  of  Latin  Europe,  which  have  adopted  the  French 
system  and  that,  although  they  give  their  units  various  nameis, 
all  are  equal  or  approximately  equal  in  value  to  the  French 
franc.  The  Swiss  and  Belgians  call  their  unit  the  franc,  but 
4;he  Italian  call  their  the  lira,  the  Spanish  call  theirs  peseta, 
the  Greeks  drachma,  the  Roumanians  leu,  the  Servians  dinar, 
the  Bulgarians  lev.  The  money  used  in  German  Austria  is  the 
crown  or  krone,  at  par  is  also  the  equivalent  in  value  of  the 
franc,  while  in  Holland  the  gulden  or  the  florin  may  be  called 
the  equivalent  of  2  francs.  The  holivar  of  Venezuela  is  also 
of  th-e  value  of  a  franc. 

Currencies  Used  in  Export  Practice. — Pounds,  francs,  marks 
and  U.  S.  dollars  are  the  chief  denominations  used  in  banking 
transactions  and  as  a  rule  none  others  should  be  employed,  al- 
though many  large  transactions  take  place  in  florins,  lire  or  even 
yen.  In  business  with  any  other  country  than  France,  when 
employing  terms  of  francs,  it  is  wise  always  to  specify  "gold 
francs,"  as  in  several  of  the  nations  named  the  nominal  gold 
value  of  the  local  denominations  fluctuates  in  exchange  value. 
Throughout  Latin  America  either  the  gold  dollar,  meaning  our 
own  denomination  of  that  value,  or  the  British  pound  sterling  is 
the  usual  banking  unit  and  no  other  ought  to  be  employed. 

Monetary  Symbols. — For  purposes  of  record  some  variations 


MARKETS  FOR  AMERICAN  GOODS  95 

in  the  use  of  monetary  sj^mbols  may  be  noted.  Thus,  £E  (or 
LE.)  means  the  Egyptian  pound,  worth  something  more  than 
the  British,  and  £T  is  the  Turkisli  pound,  worth  a  little  less  than 
the  British.  £P  is  the  Peruvian  libra  (pound)  of  the  same 
value  as  the  British.  "Dol.  Mex. "  is  used  in  the  Far  East  and 
in  the  Straits  Settlements  to  represent  the  old  Mexican  or  Trade 
dollar  with  which  we  used  to  be  familiar  forty  or  fifty  years  ago 
and  which  is  usually  worth  less  than  half  of  our  present  dollar 
(perhaps  averaging  about  45  cents  in  normal  times).  In  Latin 
American  countries  of  fluctuating  currencies  the  circulating 
medium  is  often  spoken  of  as  hilletes,  i.e.,  paper  bills,  as  distin- 
guished from  real  values  which  the  paper  is  supposed  to  but 
does  not  represent.  In  the  Argentine  Republic  they  refer  to 
the  common  currency  either  as  m/n  {moneda  nacional)  or 
c/1  {curso  legal),  but  the  gold  value  is  mentioned  as  o/s  {oro 
sellado).  In  Chile  the  fluctuating  currency  is  referred  to  as  m.c. 
{moneda  corriente).  The  Portuguese  and  Brazilian  monetary 
basis  is  the  milreis,  consisting  of  1,000  reis.  The  method  of 
writing  denominations  in  these  currencies  is  somewhat  peculiar, 
thus  375$000  indicating  375  milreis. 

Counting  in  Other  Countries. — Even  the  method  of  count- 
ing in  some  countries  varies  a  little  from  ours.  We  call  a  bil- 
lion a  thousand  million  (1,000,000,000),  and  the  French  do  the 
same;  but  in  English  usage  a  billion  is  a  million  million  (1,000,- 
000,000,000). 

In  India  the  name  for  "the  number  100,000,  whether  used  in 
reference  to  rupees,  people  or  otherwise,  is  the  "lakh"  (also 
written  lac)  ;  thus  125,000  would  be  called :  1  lakh,  25,000,  and 
would  be  expressed  in  figures  thus:  1,25,000.  A  crorc  is  100 
lakhs,  equal  to  10,000,000.  Therefore,  the  number  22,125,000 
would  be  divided  thus:  2,21,25,000  reading:  "2  crores,  21  lakhs, 
25  thousand." 

Brazilians  and  Portuguese  speak  of  a  conto  when  they  mean 
1,000,000  reis,  i.e.,  1,000  milreis  (1,000$000). 


CHAPTER  IV 

THE  EXPORT  DEPARTMENT 

Specialized  Attention  Necessary — A  Separate  Department  Noi 
Always  Required — Who  and  What  an  Export  Manager  Should 
Be — When  and  Where  an  Export  Department  May  be  Estab- 
lished— Reducing  Expenses  Through  a  "Combination"  Ex- 
port Department  and  Manager — Office  Systems  for  the  Export 
Department— Foreign  Languages,  Translators  and  Transla- 
tions. 

WHILE  at  the  outset  of  a  manufacturer's  effort  to  ac- 
quire foreign  markets  for  his  products  it  is  not  in- 
dispensable that  he  establish  a  special  or  a  separate 
export  department,  it  is  none  the  less  essential  that  some  one  in 
the  organization  take  up  the  export  end  of  the  business  as  a 
specialty,  devote  time  and  thought  to  it,  direct  its  efforts  as  well 
as  manage  its  details.  Preferably  this  should  be  some  one  in 
authority,  a  member  of  the  firm,  an  officer  of  the  company  or  an 
exceptionally  intelligent  employee  in  a  trusted  and  responsible 
position.  This  does  not  mean  that  such  an  individual  must  by 
any  means  devote  his  whole  time  and  attention  to  the  infant  ex- 
port trade. 

SPECIALIZED  ATTENTION  NECESSARY 

In  every  concern  contemplating  an  expansion  of  its  business 
in  foreign  fields  there  will  certainly  be  found  some  such  person 
as  has  been  described  who  has  an  especial  interest  in  this 
branch  of  the  business,  some  one  who  can  afford  some  leisure 
moments  during  the  day  and  some  evening  hours,  perhaps  at 
home,  to  that  consideration  of  plans  and  methods,  conditions 
and  policies,  and  to  the  direction  of  subordinate  clerks,  which 
are  extremely  desirable  for  the  successful  promotion  and  trans- 
action of  an  export  trade.  Inasmuch  as  the  beginnings  of  any 
foreign  trade  are  usually  small  and  the  progress  of  the  trade 
slow,  a  member  of  the  firm  can  usually  manage  to  keep  abreast 
of  development,  with  proper  clerical  assistance  under  his  direc- 
tion, meanwhile  training  up  younger  men  along  the  lines  which 

96 


THE  EXPORT  DEPARTMENT  97 

he  himself  has  followed,  laying  the  foundations  in  his  own  knowl- 
edge and  experience  for  the  capacity  to  direct  and  oversee  an 
export  manager  when  it  is  found  necessary  to  engage  a  special 
employee  for  this  department.  It  was  Walter  F.  Wyman,  Man- 
ager of  the  Export  Department  of  the  Carter's  Ink  Company, 
who  said :  * '  There  is  absolutely  no  reason  why  an  export  sales  de- 
partment should  not  fit  in  to  the  machinery  of  any  merchant's  bus- 
iness. It  does  not  require  special  buildings,  special  manufactur- 
ing, credit  or  traffic  departments,  and  is  simply  one  way  to  reduce 
the  overhead  expense  by  a  greater  output  per  working  day. ' '  And 
speaking  of ' '  inefficient  merchandizing ' '  he  wrote :  "  To  the  modern 
business  the  export  department  is  an  essential,  not  an  excrescence. ' ' 

THE  EXPORT  MANAGER 

First  among  the  questions  which  an  intending  exporter  is 
quite  sure  to  ask  are,  "How  much  will  it  cost  us  to  hire  an  ex- 
port manager  and  where  shall  we  find  one?"  To  take  up  the 
last  question  first,  it  may  be  said  that  there  is  at  present  no  lack 
of  applicants  for  positions  of  this  sort.  Unfortunately,  all  of 
them  have  not  the  qualities  or  experience  likely  to  commend 
them  unreservedly  for  the  positions  they  seek.  Here  is  a  rich 
opportunity  for  young  men  who  may  have  a  fancy  for  under- 
taking the  varied  and  attractive  duties  of  such  positions,  look- 
ing foi^ward  to  the  certain  large  future  growth  of  American 
export  trade  with  its  consequent  opportunities  for  themselves. 

School  and  College  Preparation. — Many  of  our  universities 
and  schools  are  giving  special  courses  designed  the  better  to  fit 
young  men  for  undertaking  the  management  of  export  trade  de- 
velopment, but  while  the  courses  that  are  offered  are  very  de- 
sirable from  many  points  of  view,  giving  their  students  a  more 
intimate  acquaintance  with  principles  of  economics  and  finance, 
yet  they  are  deficient  in  the  practical  details  of  the  actual 
carrying  on  of  an  export  business.  They  may  help  immensely 
in  the  theories,  but  they  do  not  teach  the  actual  motions. 

It  is  well  for  a  young  man  to  acquire  every  particle  of  export 
information  and  education  which  may  be  within  his  reach. 
It  will  then  perhaps  be  best  for  him  to  seek  a  position  as  assist- 
tant  in  some  large  exporting  organization,  preferably  in  a  manu- 
facturer's export  department  rather  than  with  a  professional 


98  PRACTICAL  EXPORTING 

export  house,  usually,  called  an  export  commission  house.  He 
will  learn  more  quickl}^  and  progress  faster  as  an  assistant  in 
a  manufacturer's  export  department,  and  can  there  pick  up 
quite  as  much  of  the  technical  details  of  the  transaction  of 
export  business  as  he  could  with  the  export  commission 
house,  although  in  the  latter  he  would,  though  probably  only 
with  the  lapse  of  a  number  of  years,  acquire  a  smattering  of 
business  knowledge  of  a  great  many  different  kinds  of  goods 
and  branches  of  trade. 

Candidates  Available. — The  manufacturer  seeking  an  export 
manager  may  find  one  among  men  who  have  had  experience 
as  subordinates  in  export  houses  or  in  the  export  departments 
of  other  manufacturers,  or  he  may  find  men  who  have  traveled 
to  some  extent  abroad,  or  men  of  foreign  birth  who  have  had 
business  experience  in  one  or  perhaps  in  several  foreign  mar- 
kets, or  he  may  build  up  his  own  manager  from  among  his 
employees,  helping  the  candidate  as  much  as  possible  with  his 
own  experience  and  assisting  him  in  his  outside  studies.  The 
main  thing  is  to  find  the  candidate  of  thoroughly  desirable 
qualities. 

Qualities  to  Be  Sought. — Any  one  in  charge  of  building  up 
and  carrying  on  an  export  trade  should  be  well  read  and  edu- 
cated and  especially  versatile  and  resourceful.  He  ought  to 
be  what  is  known  as  a  "gentleman,"  for  qualities  involved  will 
show  themselves  in  his  correspondence,  and  he  will  from  time 
to  time  be  called  upon  to  meet  foreign  customers,  very  likely 
to  travel  occasionally  in  foreign  countries. 

It  is  by  no  means  so  necessary  that  the  export  manager  have  an 
intimate  technical  knowledge  of  every  detail  of  the  manufacture 
of  the  goods  which  he  sells,  but  certainly  a  general  and  comprehen- 
sive knowledge  in  these  respects  is  necessary,  yet  that  knowledge 
any  one  having  the  other  qualifications  desirable  in  an  export 
manager  cannot  fail  to  acquire  in  a  reasonable  length  of  time. 

A  smattering,  lat  least,  of  a  knowdedge  of  foreign  languages 
is  desirable,  in  fact  almost  essential,  for  the  export  manager 
ought  to  be  able  to  read  ordinary  correspondence  which  will 
reach  his  desk  in  the  two  or  three  leading  commercial  lan- 
guages of  the  world.  Even  if  he  does  not  speak  or  write  these 
languages  he  should  be  able  to  read  them  intelligently,  if  for  no 


THE  EXPORT  DEPARTMENT  99 

other  reason  tlian  to  be  able  to  check  off  the  work  of  translators 
employed  and  assure  himself  that  both  the  sense  and  the  spirit 
of  letters  received  by  him  and  written  by  him  are  correctly 
set  forth  in  the  translations  which  he  employs  others  to  make 
for  him.  Although  a  speaking  knowledge  of  languages  is  some- 
times hard  to  acquire  without  considerable  actual  practice,  yet 
any  man  fond  of  foreign  tongues  can  quickly  enough  acquire  the 
abilit}^  to  read  them.  That  ability  helps  him  not  only  in  his  own 
correspondence  but  assists  in  broadening  his  general  equipment. 

Foreign  Languages. — It  is  quite  inexcusable  for  any  man 
engaged  in  the  export  trade  not  to  understand  at  least  the 
principles  applying  to  the  pronunciation  of  the  commoner  for- 
eign languages,  especially  the  French,  Spanish  and  German. 
It  is  absurd  for  a  man  doing  business  with  Latin  America  to 
pronounce  Santiago  San-tee-ay-go — instead  of,  properly,  "  San- 
tee-ah-go."  It  is  essentially  ridiculous  for  one  doing  business 
with  firms  in  other  countries  to  address  "Mr.  Hermanos"  or 
"]\Ir.  Freres."  Elementary  notions  of  the  Spanish  or  French 
language,  which  can  easily  enough  be  acquired  and  which  ought 
to  be  acquired  almost  at  the  outset  of  an  attempt  to  win  trade 
in  other  countries,  should  teach  the  exporter  that  hermanos 
is  the  Spanish  equivalent  for  "brothers" — ^'Jimenez  Herma- 
nos" means  Jimenez  Brothers.  Or,  the  French,  "Jouhert 
Freres"  would  be  in  English,  Joubert  Brothers.  Such  firms 
must  not  be  addressed  as  Dear  Sir,  but  Gentlemen.  It  ought 
not  to  be  necessary  even  for  the  beginner  at  exporting  to  hear 
the  common  words  in  the  principal  foreign  languages  pro- 
nounced many  times  over  to  remember  them  ever  afterward,  if 
he  is  the  versatile,  adaptable  man  likely  to  be  a  successful  ex- 
porter. Of  course,  not  every  exporter  of  this  description  in 
other  respects  has  a  natural  aptitude  for  acquiring  other  lan- 
guages, but  he  can  alwaj\s  ask  questions  and  have  words  re- 
peated and  by  dint  of  repetition  impress  on  his  mind  the  com- 
mon ones  which  it  is  essential  he  should  know.  Certainly  it  is 
the  unpardonable  sin  for  an  American  to  travel  in  foreign 
countries  and  not  there  learn  the  elementary  principles  of 
their  languages,  including  pronunciation,  or  on  his  return  from 
a  foreign  trip  to  forget  what  he  ought  to,  must  have  learned. 

Advantages   of   Foreign   Trips. — With   the   development   of 


100  PRACTICAL  EXPORTING 


COMMON  TERMS  AND  ABBREVIATIONS  IN  I 

FOREIGN  LANGUAGES 

SPANISH 

Hermano    (sing.)     (abbreviated    Hno) vfro^hpr^ 

Hermanos    (plural)     (abbreviated   Huos) Brothers 

Hijo    (sing.)     •g'^^^ 

^IXttbrlLted -WO  •;•:;:••;:•••■■• --^v.;;;;;^ 

Compaiu-a     (abbreviated    Cia.)     Suc™7s 

Sucesores     (abbreviated    Sues.) • 4  ■•'  V  aV"  'T  ^^'^'^'^^^^^^ 

Sooiedad   Anonima    (abbreviated   S.    A.) Joint   Stock    Company 

Sociedad  en  Comandita   (abbreviated  S.  en  C.) Limited  Partnership 

FRENCH 

„  .         /  •    „  \  Brother 

Frere     (sing.)      Brothers 

Freres     (plural)     a„„    „r    ^nn^ 

Fils    (both   sing,    and   plural) Son   or    bons 

Veuve     (abbreviated    Vve.) ComnanT 

.Compagnie      (abbreviated     C.e.    SucSrs 

Successeurs    (abbreviated    Sues.)     ■  • ;  ■  •  •  •  ■  •, •  oncce&sorb 

Socilte   Anonyme    (abbreviated    Soc.    Anon.) Joint   block   Company 

GERMAN 

Briider  or  Gebriider    (plural)    (abbreviated   Gebr.) BrotJ^rs 

Sohn     (sing. )     : ■ '^"'^ 

Sohne    (plural)     Wt-a^^ 

Witwe    (abbreviated   Wwe.)     •„■  "  ■,'  "  ^'  "'^^°^ 

Aktien-Gesellschaft    (abbreviated    A.    G.) Joint    Stock    Company 

Gesellschaft  mit  beschranktcr  Haftung    (abbreviated   G.  m.   b.  H.)  .......  - 

Limited    Liability    Company 

Handeisge'sellschaft '  '.'.'.'.'.'.'.  .  .'.'." Trading     Company 

Vormals    (abbreviated  vorm.)    Formerly  i.   e.,    buccessors 

ITALIAN 

Fratello    (sing.) .Brother 

Fratelli    (plural)     (abbreviated    Flli.)     Brothers 

Figlio    ( sing. )     Son 

Pigli    (plural)     Sons 

Successori    (abbreviated    Sues.)     Successors 

Societa   Anonima    (abbreviated    S.   A.)     Joint   Stock    Company 

Compagnia     (abbreviated    C.)      Company 

Ditta    Firm   of 

PORTUGUESE 

Irmao     (.sing. )      Brother 

Irmaos    (plural)     Brothers 

Filho     (sing.)      Son 

Filhos    (plural)     Sons 

Viuva     (abbreviated    Vva.)      Widow 

Companhia    (abbreviated    Ca.)     Company 

Sociedade  Anonima    (abbreviated   Soc.  Anon.)    Joint   Stock  Company 

DUTCH 

Gebroeders    (abbreviated    Gebr.)     Brothers 

Zoon    (sing.)     (abbreviated    Zn.)     Son 

Zonen    (plural)     (abbreviated    Znen.)     Sons 

Weduwe    (abbreviated    Wed)     Widow 

Voorheen    (abbreviated  v.    h.)     Formerly,    i.   e.,    Successors  to 

De     Erven     Succes.sors 

Maatschajipij     (abbreviated    Mij.)     Company 

Handelsvereeniging    (or    Handelmaatschappij) Trading    Company 

DANISH 

Brodrene    (abbreviated    Briidr.)     Brothers 

Son     (sing.)      Son 

Siinner    (plural)     ■  •  ■  •  •  Sons 

Efterfolger    (abbreviated   Eftfl. )     ;  Successors 

Akticsel.skabet    (abbreviated  Aks.  or  A.  S.) Joint  Stock  Company 

SWEDISH  „      , 

Broderna     Brothers 


Son    (sing.) 


Son 


Sfiner     (plural)     •  •  •  •  ■  ^""8 

Eftertr-idare     (abbreviated    Eftr.)     Successors 

Kompaniet     .•:•••„••,•  -f^^ompany 

Aktiebolaget    (abbreviated   Akt.   or   A.  B.)    Joint   Stock  Company 


THE  EXPORT  DEPARTMENT  101 

the  export  department  it  will  always  be  found  desirable  to  allow 
the  manager  to  make  occasional  trips  to  some  of  the  principal 
export  markets  which  have  been  developed.  Unless  he  does  so 
at  least  once  in  every  two  or  three  years  he  is  quite  apt  to  get 
out  of  touch  with  the  foreign  point  of  view,  lose  a  certain  part 
of  the  sympathy  which  he  ought  to  have  with  the  idiosyncrasies 
and  habits  of  thought  and  life  of  customers  in  other  countries. 
Such  occasional  trips,  even  if  only  brief  ones,  help  immensely 
in  creating  and  keeping  alive  that  sympathy,  and  hence  in  the 
more  satisfactory  conduct  and  development  of  export  trade 
from  the  factory. 

The  Export  Manager  as  Correspondent. — Speaking  of  some 
aspects  of  the  general  conduct  of  a  manufacturer's  export  de- 
partment, George  H.  Richards,  when  manager  of  that  depart- 
ment of  the  Remington  Typewriter  Company,  said: 

"Every  effort  should  be  made  to  keep  a  cordial  and  personal 
note  running  through  all  communications.  The  mere  routine 
or  careless  handling  of  letters  in  the  office  will  often  offset  the 
value  of  the  personal  factor  in  the  field.  The  correspondence 
should  be  directed  and  supervised  by  some  one  personally  ac- 
quainted with  requirements  and  conditions,  whose  experience 
enables  him  to  handle  orders  and  all  the  necessary  details,  and  to 
adjust  all  questions  and  disputes  in  such  a  way  as  to  prevent  any 
friction  or  misunderstanding.  This  is  particularly  needful  with 
most  of  the  countries  where  other  than  English  is  spoken. 

"The  manufacturer  should  not  allow  any  and  everybody  in 
the  office  to  write  all  sorts  of  letters  on  all  sorts  of  subjects. 
The  foreign  correspondence  should  be  centralized.  It  should 
be  received  and  answered  in  one  department.  It  should  be 
under  the  direct  check  of  some  one  qualified  to  supervise  it, 
even  if  too  voluminous  to  be  handled  by  him  alone.  To  accom- 
plish this  it  is  preferable  that  the  department  be  in  charge  of 
some  one  who  has  had  experience  in  the  field  and  can  thus  inspire 
the  proper  spirit  in  those  working  under  and  through  him. 
This  provision  should  also  extend  to  orders  as  far  as  possible. 
Foreign  orders  should  be  handled  by  those  trained  and  experi- 
enced in  foreign  work.  The  attention  to  detail  and  the  judg- 
ment required  are  such  that  nothing  but  poor  results  can  be 
expected  from  an  arrangement  which  permits  foreign  and  do- 


102  PRACTICAL  EXPORTING 

mestic  orders  to  be  passed  along-  to  the  manufacturing  depart- 
ment through  the  same  general  channels/' 

Signatures, — We  do  not  ordinarily  in  the  United  States  at- 
tach sutlieient  importance  to  the  signatures  appended  to  our 
correspondence  and  even  to  valuable  documents  and  binding 
contracts.  Loose  practices  in  this  regard  should  not  be  ex- 
tended to  the  export  department.  No  one  should  sign  letters 
intended  for  foreign  destinations  except  a  competent,  responsi- 
ble official.  Above  all,  no  one  not  specifically  authorized  to  do 
so  should  ever  sign  foreign  drafts  or  endorse  steamships  bills  of 
lading.  If  the  export  manager  is  entrusted,  as  he  should  be,  with 
the  signature,of  his  firm,  he  and  no  one  else  should  sign  and  his 
house  must  stand  back  of  him  through  thick  and  through  thin. 

Under  no  circumstances  must  letters  to  foreign  correspond- 
ents be  signed  with  rubber  stamps.  The  use  of  such  atrocious 
and  indefensible  expressions  as  "Dictated  but  not  read," 
"Signed  in  the  absence  of,"  etc.,  must  at  all  costs  be  avoided. 
It  is  a  pity  that  they  have  been  growing  so  fast  in  vogue  in  this 
country  during  recent  years.  Their  use  in  foreign  correspond- 
ence will  be  regarded  with  resentment  or  even  as  an  insult. 

On  the  other  hand,  the  expression  "per  pro,"  which  Amer- 
icans have  sometimes  adopted  thoughtlessly,  from  foreign  ex- 
amples M^hich  have  come  under  their  notice,  must  not  be  mis- 
used. It  means  "per  procuration,"  and  indicates  that  the  per- 
son so  signing  has  been  authorized  by  his  principals  so  to  do. 
Although  legally  the  principal  is  bound  only  so  far  as  the  limits- 
of  authority  actually  given  to  the  agent  extend,  yet  generally 
this  signature  is  taken  as  indicating  full  authority  officially 
given  to  the  .agent.  It  is  not  necessary  to  use  any  such  expres- 
sion, but  no  one  ought  to  be  allowed  to  sign  even  an  ordinary 
letter  intended  for  customers  or  prospects  in  foreign  lands  ex- 
cept a  person  of  importance  and  standing  in  the  home  office — 
one  in  whom  full  trust  and  responsibility  are  reposed,  and, 
above  all,  no  one  else  must  ever  be  permitted  to  sign  or  to  en- 
dorse valuable  or  official  papers.  Considerable  sacredness  at- 
taches to  signatures  in  other  countries  and  should  attach  to 
them  in  transactions  connected  with  our  own  export  trade. 
The}^  should  be  without  exception  regarded  as  formal  and  bind- 
ing in  every  respect. 


TEE  EXPORT  DEPARTMENT  103 

Salary  of  an  Export  Manager. — All  grades  and  qualities  of 
export  inaiiagers  are  to  be  found.  A  manufacturer  may  pay 
from  $200  a  month,  or  less,  up  to  $200  a  week,  or  more — and 
get  for  his  money  varying  degrees  of  experience,  knowledge, 
ability  and  success.  No  employee  capable  of  tilling  a  mana- 
gerial position  ought  to  be  sought  for  less  than  $200  a  month 
— most  competent  candidates  will  require  possibly  twice  as 
much.  Assistants,  typists,  "Spanish  clerks,"  are  to  be  had  at 
$25  or  $35  a  week.  With  training,  good  ones  may  be  developed 
up  to  manager's  caliber — but  only  under  supervision  and  train- 
ing by  one  who  already  "knows."  Merely  previous  employ- 
ment in  some  connection  with  export  trade  does  not  necessarily 
qualify  a  young  man  to  be  "export  manager."  Making  a 
youth  into  a  manager  just  because  he  is  a  foreigner  and  speaks 
Spanish  (or  any  other  language)  is  not  usually  good  business. 
Experience,  training,  are  required. 

Almost  any  properly  trained  and  qualified  export  manager, 
worth  the  minimum  salary,  ought  to  be  able  to  establish  some 
profitable  foreign  business  connections  and  handle  details  of 
shipping  easily,  almost  without  thinking.  But  the  manager 
ought  to  do  a  good  deal  more,  solve  complexities,  start  the  ma- 
chine running  right.     The  bigger  man  is  preferable. 

LOCATION  OF  THE  EXPORT  DEPARTMENT 

An  export  department  may  be  established  in  the  manufacturer's 
own  factory  or  main  office,  or  it  may  be  thought  advantageous  to 
establish  it  as  an  entirely  separate  office  at  New  York  or  other  point 
through  which  the  bulk  of  the  export  trade  actually  passes.  There 
are  strong  arguments  to  be  advanced  in  support  of  both  plans. 

Advantages  at  Factory. — Obviously,  if  the  export  depart- 
ment is  located  at  the  factory  or  in  the  main  office  of  the  con- 
cern, there  will  result  a  much  closer  touch  with  factory  detail 
and  policy.  The  department  will  be  under  the  immediate  su- 
pervision of  the  proprietors  or  general  managers  and,  in  turn, 
the  manager  of  the  export  department  will  be  personally  pres- 
ent to  supervise  every  detail  of  packing,  invoicing  and  other 
formalities,  and  even  of  the  actual  manufacturing  of  the  ex- 
port goods.  In  the  very  beginning,  usually  the  small  begin- 
ning, of  an  export  trade,  it  is  probable  that  the  location  of  the 


104  PBACTICAL  EXPORTING 

export  department  at  the  factory  is  preferable.  Its  retention 
there  with  the  growth  of  the  export  business  to  considerable 
size  and  importance  must  depend  upon  the  individual  policy  of 
the  manufacturer  in  each  instance. 

Advantages  at  Port. — The  location  of  the  export  depart- 
ment at  the  port  through  which  most  of  the  foreign  business 
of  a  concern  passes,  which  usually  means  the  City  of  New  York, 
may  be  either  in  the  way  of  a  separate  and  distinct  office  or 
may  be  an  adjunct  to  an  already  established  New  York  office, 
or  it  may  combine  in  one  man  the  functions  of  a  domestic  New 
York  agent  and  an  export  manager.  There  are  undoubtedly 
several  and  notable  advantages  to  be  gained  from  the  estab- 
lishment of  such  an  office  in  New  York,  at  least  when  an  export 
trade  has  been  inaugurated  and  developed  in  promising  fashion. 

The  export  manager,  when  located  in  New  York,  has  an  op- 
portunity for  a  generally  wider  acquaintance  among  other 
managers  and  exporters  and  with  conditions  surrounding  ex- 
port trade  in  general ;  hence  he  usually  acquires  a  broader  point 
of  view.  He  probably  has  the  opportunity  of  meeting  in  per- 
son a  great  many  more  foreign  buyers  than  would  be  the  cage 
were  he  located  at  some  point  in  the  interior  of  the  country, 
possibly  many  hundreds  of  miles  distant.  He  also  has  the 
chance  of  cultivating  day  by  day  and  week  by  week  the  buyers 
for  the  hundreds  of  export  commission  houses  located  in  New 
York  and,  through  frequent  meetings,  establishing  intimate 
and  possibly  valuable  acquaintance  with  some  of  them. 

Then,  too,  he  can  look  after  all  of  the  details  of  shipping  the 
goods  which  he  sells  to  customers  in  other  countries,  he  can 
make  unnecessary  the  employment  of  forwarding  agents  for 
the  despatch  of  his  foreign  goods  or  use  them  with  perhaps 
better  discretion.  He  can  often  assist  materially  in  financing 
readily  and  economically  drafts  drawn  against  foreign  cus- 
tomers through  establishing  relations  with  some  of  the  impor- 
tant New  York  foreign  exchange  banking  houses. 

While  it  is  possible  to  combine  in  one  person  the  activities  of 
a  general  New  York  agent  with  those  of  an  export  manager, 
yet  since  it  is  usually  believed  better  to  make  the  first  steps 
toward  export  trade  development  at  the  factory,  the  transfer 
of  the  export  department  to  New  York  will  probably  in  most 


THE  EXPORT  DEPARTMENT  105 

cases  indicate  a  promising  growth  in  export  trade,  and  this  should 
imply  importance  enough,  or  sufficient  promise,  to  warrant  the  de- 
votion to  that  trade  of  an  individual 's  sole  time  and  attention.  This, 
again,  is  purely  a  question  of  individual  policy  in  each  instance. 


COMBINATION  EXPORT  MANAGERS 

A  large  and  notable  class  of  agents  has  existed  for  many 
years  in  New  York,  and  their  numbers  have  recently  grown 
fast,  who  are  commonly  termed  manufacturer's  export  agents 
or  combination  export  managers.  Instead  of  establishing  his 
own  export  department  it  is  possible  for  the  manufacturer  to 
utilize  the  services  of  one  of  these  agents.  They  are  by  no 
means  purely  an  American  institution.  Similar  combination 
representatives  of  manufacturers  are  to  be  found  in  London, 
and  they  were  an  especially  noticeable  feature  in  the  export 
trade  of  Hamburg  where  they  have  been  numbered  by  the 
score,  some  of  them  maintaining  large  and  attractive  sample 
rooms — where  indeed  there  was  an  association  of  such  represen- 
tatives with  formal,  printed  regulations  governing  their  business. 

Cost  of  Combination  Managers. — The  principle  on  which 
such  combination  representatives  work  varies  with  the  indi- 
vidual but  essentially  involves  the  division  of  expenses  among 
the  manufacturers  whose  agencies  are  secured.  Ordinarily  such 
a  "combination"  export  agent  will  require  from  each  line  rep- 
resented a  contribution  per  month,  or  per  annum,  representing 
some  pro  rata  share  of  the  expenses  of  maintaining  the  office  and 
carrying  on  the  necessary  propaganda  for  the  development  of 
export  trade  on  a  stated  basis.  Such  a  contribution  is  usually 
coupled  with  a  provision  for  a  percentage  commission  on  all  ex- 
port trade  thus  developed,  or  sometimes  in  any  other  way  trans- 
acted. Some  of  the  combination  representatives  represent  four 
or  five  manufacturers,  some  of  them  as  many  as  sixty  or  seventy- 
five.  Occasionally  one  will  be  found  who  will  accept  an  agency 
on  a  strictly  commission  basis  without  requiring  advances  on  ac- 
count. Offices  maintained  by  them  range  from  desk  room  in 
some  other  person's  office  up  to  quite  elaborate  display  rooms; 
their  organizations,  from  no  one  but  the  agent  himself  up  to  a 
corps  of  clerks,  stenographers  and  even  foreign  traveling  sales- 


106  PRACTICAL  EXPORTING 

men.  Contributions  toward  expenses  from  individual  manufactur- 
ers represented  may  run  from  $50  a  year  up  to  $50  a  week,  eacli. 

Work  of  Combination  Managers. — As  their  organizations 
differ,  so  do  the  operations  of  these  combination  export  repre- 
sentatives. Some  agents  of  this  sort  do  little  beyond  distribut- 
ing a  manufacturer's  catalogues  and  price  lists  among  New 
York  export  commission  houses,  usually  endeavoring  to  secure 
sample  orders  from  them.  Other  agents  in  this  category  not 
only  work  among  the  New  York  export  houses  but  carry  on 
direct  correspondence  with  prospects  in  foreign  countries  in 
an  effort  to  secure  orders  from  them. 

Some  of  these  agents  give  no  attention  at  all  to  details  of 
shipping  or  financing  the  foreign  trade  of  their  principals, 
others  attend  to  every  such  detail.  It  is  the  latter,  that  is, 
those  representatives  who,  more  or  less,  have  full  charge  of  all 
of  the  export  relations  of  their  principals  who  usually  call 
themselves  "export  managers."  In  this  connection  that  term 
should  be  understood  as  a  "combination  export  manager."  In- 
dividuals and  firms  operating  under  this  style  usually  act  for 
from  five  to  ten  different  principals.  It  is  evident  enough  that 
a  manufacturer  contemplating  reducing  his  expenses  in  the  de- 
velopment of  export  trade  through  the  employment  of  a  com- 
bination New  York  agent  has  a  wide  choice  offered  him. 

Advantages  of  a  Combination  Export  Manager. — The  prin- 
cipal argument  in  favor  of  the  combination  plan  of  export 
manager  is  the  economy  in  cost  thus  secured.  Instead  of  main- 
taining a  separate  export  office  of  his  own,  paying  salaries  to  a 
special  export  manager  and  probably  undertaking  other  inci- 
dental expenses,  a  manufacturer  through  joining  a  combination 
of  other  manufacturers  in  the  employment  of  one  indi- 
vidual or  firm  undoubtedly  saves  a  part  of  the  inevitable  ex- 
pense. The  advantages  of  a  combination  representative  are 
especially  noticeable  in  cases  where  a  manufacturer  could  not 
in  any  event  contemplate  the  establishment  of  his  own  New 
York  office.  The  combination  representative  is  always  on  the 
ground,  has  no  interests  to  serve  except  those  connected  with 
the  export  trade,  enjoys  or  acquires  a  wide  acquaintance  among 
export  buyers  in  New  York,  has  the  opportunity,  if  he  is  the 
right  sort,  of  meeting  a  good  many  foreign  buyers,  who  visit 


TEE  EXPORT  DEPARTMENT  107 

this  port.  Because  he  makes  exporting  his  profession,  he  may  not 
infrequently  be  better  posted  in  some  details  of  export  practice 
than  would  be  an  amateur  export  manager  at  an  interior  factory. 
In  view  of  the  varied  practices  of  these  combination  export  repre- 
sentatives as  they  exist  to-day,  a  manufacturer  can  choose  from 
among  them  that  one  who  not  only  appeals  most  strongly  in  a 
personal  way,  but  the  scope  of  whose  operations  lies  within  the 
limits  which  he  would  prefer  to  lay  down  for  such  an  agent. 

Some  Objections  to  Combination  Managers. — The  person- 
ality of  the  representative  should  be  equally  as  serious  a  factor 
in  his  choice  in  the  case  of  a  combination  export  manager  as  in 
the  case  of  an  individual  employee.  The  fact  that  the  com- 
bination man  represents,  say,  ten  or  twenty  different  prin- 
cipals, by  no  means  argues  either  that  the  right  sort  of  per- 
sonality is  not  necessary  or  that,  because  a  number  of  factories 
are  represented,  his  personality  must  be  commendable.  Be- 
cause of  this  element  of  personality,  as  well  as  on  account  of 
the  var^ang  activities  of  these  combination  representatives,  it 
is  most  strongly  to  be  recommended  that  the  manufacturer  con- 
templating such  an  agency  arrangement  make  the  personal  ac- 
quaintance of  representatives  whom  he  may  have  under  con- 
sideration. It  will  be  found  highly  desirable  also  for  the 
manufacturer  to  spend  a  little  time  and  work  with  such  repre- 
sentatives, and  on  as  many  and  as  frequent  occasions  as  possi- 
ble. Furthermore,  the  principal  in  such  arrangement  must 
not  fancy  that  simply  through  making  arrangements  with  a 
combination  agent  to  represent  him  in  the  export  field  he  can 
thus  shift  all  the  burden  to  the  representative.  He  will  find, 
if  he  keeps  a  keen  eye  on  the  progress  of  his  business  and  is 
eager  for  its  sure  and  sound  development,  that  it  will  still  be 
necessary  for  him  to  do  a  good  many  things  at  the  factory.  He 
will  still  have  to  attend  to  the  duties  of  manufacturing  the 
right  goods  in  the  right  way,  packing,  invoicing,  etc.,  but  very 
especially  he  will  find  it  essential  to  keep  continual!}^  at  the  task 
of  inspiring  and  enthusing  as  well  as  educating  the  combination 
representative,  so  far  as  his  own  special  line  is  concerned. 

Since  the  combination  representatives  may  have  in  hand  the 
interests  of  a  dozen  or  two  or  three  dozen  manufacturers,  not 
the  same  attention  maj^  be  possible  to  each  of  these  lines.     That 


108  PRACTICAL  EXPOBTINO 

his  own  is  not  neglected  or  forgotten  must  be  the  task  of  each 
manufacturer.  While  a  technical  knowledge  of  each  line  is  not 
to  be  expected,  is  probably  not  required  in  the  case  of  such  a 
combination  export  agent,  yet  the  more  he  knows  about  the 
goods  which  he  tries  to  sell  the  better  for  all  concerned.  The 
principals  involved  will,  therefore,  make  no  mistake,  when  they 
have  arranged  with  such  an  agent  who  is  apparently  a  satis- 
factory and  desirable  connection,  in  bringing  him  on  to  the 
factory  periodically  and  there  becoming  better  acquainted  with 
him  while  he  becomes  better  acquainted  with  his  principal's 
policy  and  with  the  organization  of  the  office  and  factory,  with 
the  details  of  the  manufacture  of  the  goods,  and  the  char- 
acter and  composition  of  the  products  in  which  he  is  interested. 
Among  the  hundreds  of  such  combination  export  representa- 
tives in  New  York  there  are  naturally  included  men  of  vary- 
ing character  and  ability.  Some  of  them  are  honest  and  hard 
working;  others  do  not  merit  those  adjectives.  Theoretically, 
it  should  be  possible  for  such  a  representative  to  start  and  to 
develop,  at  least  up  to  a  certain  point,  an  export  trade  on  a 
satisfactory  basis  for  each  of  the  principals  he  represents. 
Practically,  from  what  has  been  said  it  will  be  observed  that 
discretion  and  care  should  be  exercised  in  the  selection  of  such 
an  agent,  despite  the  fact  that  numbers  of  them  are  to  be  called 
successful   and  recommendable. 

OFFICE  SYSTEMS  FOR  THE  EXPORT  DEPARTMENT 

Separate  office  records  and  systems  for  the  export  depart- 
ment are  highly  desirable,  indeed,  almost  vital  in  connection 
with  office  or  factory  where  the  export  end  is  only  a  part  of  the 
whole  business.  Not  only  should  the  export  manager  have  ev- 
ery detail  of  his  own  business  within  arm's  reach,  but  there 
will  arise  frequent  necessity  for  records  of  his  own  relations  in 
regard  to  export  orders  with  other  departments  in  the  office  or 
factory.  All  should  be  thoroughly  systematized  and  have  the 
personal  and  constant  supervision  of  the  man  in  charge  of  and 
responsible  for  the  export  end  of  the  business. 

Receipt  of  Letters. — Every  letter  relating  to  export  trade 
should  go  direct  to  the  export  department  immediately  upon  its 
receipt.     If  the  rule  of  the  establishment  is  that  all  correspond- 


THE  EXPORT  DEPARTMENT  109 

eiice  must  first  pass  through  the  hands  of  some  superior  official, 
nevertheless  some  arrangement  should  be  made  for  prompt  de- 
livery of  every  appropriate  letter  to  the  export  manager  for 
his  information,  even  if  action  on  such  communications  must  be 
dictated  by  his  superiors.  Necessity  for  consultation  in  regard 
to  any  communication  may  easily  be  indicated  by  attaching 
to  that  communication  a  memorandum  slip  conveying  such  in- 
structions to  the  export  manager. 

The  envelope  in  which  a  letter  arrives  from  a  foreign  country 
should  be  immediately  attached  to  its  enclosure,  after  opening. 
This  is  especially  necessary  if  all  mail  for  the  establishment  is 
opened  by  an  office  boy  or  by  some  one  not  identified  vv'ith  the 
export  department.  There  are  many  reasons  for  this  rule. 
One  is  that,  especially  in  the  Latin  countries,  some  names  of 
tovi'ns  are  often  duplicated  and  the  letter-head  of  a  correspond- 
ent does  not  any  more  frequently  indicate  the  country  in 
which  his  home  town  is  located  than  do  ordinary  American  let- 
ter-heads bear  the  "U.  S.  A."  imprint.  There  are  a  number 
of  cities  called  Santiago,  Santa  Fe,  or  Valencia,  in  sundiy  Span- 
ish-speaking countries.  While  sometimes  letters  are  dated  ' '  San- 
tiago de  Cuba"  or  "Santiago  de  Chile,"  yet  this  practice  is  by  no 
means  invariable.  In  any  event,  when  the  envelope  is  attached  to 
the  letter-head,  the  postage  stamp  and  possibly  other  indications 
help  in  identifying  the  country  of  origin  as  well  as  sometimes  con- 
veying information  in  other  respects  not  necessary  to  detail  here. 

If  letters  received  have  to  be  sent  out  of  the  office  for  trans- 
lation, then  a  record  should  be  kept  of  the  name  and  address  of 
the  writers,  the  date  of  the  letter  and  a  memorandum  of  the 
contents  so  far  as  the  export  manager  can  understand  them,  the 
date  on  which  sent  for  translation  and  other  records  that  may  be 
thought  material  in  order  to  guard  against  possible  loss. 

Despatch  of  Letters. — In  no  respect  are  American  manufac- 
turers more  severely  criticized  than  in  their  failure  to  prepay 
postage  at  foreign  rates.  This  is  believed  to  be  due  almost 
without  exception  to  pure  carelessness  rather  than  to  ignorance 
of  the  difference  between  foreign  and  domestic  postage  require- 
ments. There  are  probably  few  Americans  in  any  walk  of  life 
who  do  not  now  fully  understand  that  the  general  rate  of  for- 
eign postage  is  5  cents  for  the  first  ounce,  instead  of  the  2 


110  PRACTICAL  EXPORTING 

cent  rate  which  applies  in  our  own  country.  If  2  cents  only 
is  prepaid  when  the  correct  rate  is  5  cents,  then  it  is  the  cus- 
tom for  the  delivering  post  office  to  collect  double  the  defi- 
ciency, that  is,  twice  3  cents,  or  a  total  of  6  cents.  This  is 
a  small  matter  on  each  individual  letter,  but  when  a  foreign 
house  carrying  on  an  extensive  American  correspondence  is 
thus  penalized  on  many  letters,  it  may  sometimes  amount  to  as 
much  as  $2  or  $3  a  week  or  more,  and  not  a  few  foreign  houses 
have  adopted  the  practice  of  refusing  to  receive  such  "taxed" 
letters,  as  they  are  called.  Although  in  response  to  many  ap- 
peals our  American  post  office  department  is  understood  to  be 
contemplating  an  effort  to  hold  up  underpaid  foreign  letters, 
calling  the  attention  of  the  senders,  when  known,  to  the  defi- 
ciency in  postage,  yet  there  is  a  question  how  successful  such  an 
effort  may  be  or  how  long  it  may  be  continued,  especially  in 
view  of  the  claim  that  in  so  doing  certain  rules  of  the  Interna- 
tional Postal  Union  may  be  transgressed.  Anyhow,  no  export 
manager  should  attempt  to  evade  his  own  responsibility. 

Rates  of  Foreign  Postage. — The  rules  governing  foreign 
postage  rates  may  be  learned  from  the  Official  Postal  Guide 
which  can  be  inspected  at  any  post  office.  They  are  to  be 
found  also  in  innumerable  almanacs  and  other  publications  and 
may  well  be  prominently  posted  in  the  export  department. 
The  5  cent  rate  (for  the  first  ounce,  3  cents  for  each  succeed- 
ing ounce)  may  for  general  purposes  be  assumed  as  applying 
to  all  foreign  countries  excepting  only  our  neighbors,  Canada 
and  Mexico,  with  Cuba  and  Panama,  some  of  the  British  West 
Indies,  the  United  Kingdom,  New  Zealand,  British  Guiana, 
British  Honduras,  the  Dutch  West  Indies,  the  Dominican  Ke- 
public,  etc.,  with  all  of  whom  we  have  special  postal  conventions 
establishing  our  domestic  2  cent  rate.  There  are  other  exceptions 
for  which  space  here  ought  not  to  be  required.  The  Philippines, 
Hawaii,  Porto  Rico  and  the  Virgin  Islands  are  not  foreign 
countries,  although  we  rightly  term  them  export  markets. 

The  Problem  of  Under-Paid  Postage. — How  to  ensure  the 
prepayment  of  correct  postage  on  foreign  letters  is  a  problem 
which  is  solved  in  various  ways  by  different  exporters.  In 
most  large  offices  letters  are  folded,  sealed  and  despatched  by 
office  boys  in  a  special  department.     To  bring  home  to  such 


THE  EXPORT  DEPARTMENT  111 

mailing  clerks  the  necessity  of  differentiating  between  foreign 
and  domestic  letters  some  exporters  employ  envelopes  of  a  dis- 
tinctive color,  blue  or  yellow,  for  instance,  when  the  usual  en- 
velope is  white.  Other  exporters  employ  square  envelopes  for 
their  foreign  correspondence  instead  of  the  usual  domestic  ob- 
long envelope.  Yet  others  use  for  all  their  foreign  correspond- 
ence envelopes  bearing  the  embossed  5  cent  stamp.  The  last  is 
perhaps  the  most  certain  of  all,  for  it  places  final  responsibility 
on  the  export  manager  himself,  or  on  whoever  else  signs  the 
letter,  and  does  not  trust  to  the  possibly  hurried  attention  of 
the  most  intelligent  mailing  clerk.  All  rules,  however,  are 
likely  to  fail  in  the  case  of  bulky  letters  which  cannot  be  en- 
closed in  the  usual  distinctive  envelopes  employed  for  foreign 
correspondence,  and  since  in  the  case  of  a  heavy  enclosure  of 
many  papers  the  tax  for  deficient  postage,  if  only  prepaid  at 
domestic  rates,  is  correspondingly  severe,  it  is  in  these  cases 
emphatically  the  duty  of  the  export  manager  personally  to  see 
that  these  bulky  letters  are  properly  weighed  and  stamped. 

Square  Envelopes. — The  use  of  the  square  envelope,  taking 
a   quarto   sheet   folded   into   four,   is   almost   universal   on   the 
Continent  of  Europe  and  throughout  Latin  America.     It  has 
been  growing  in   favor  for  foreign  use  in   England  and  the 
British    Colonies   as   it   has   in   this   country   in   recent   years. 
Apart    from    distinguishing    foreign    correspondence    from    do- 
mestic, the  square  envelope  has  other  advantages  to  commend  it. 
Incidentally,  it  may  be  remarked  that  the  use  of  **wmdow"  envel- 
opes is  just  as  legal  in  foreign  as  in  any  other  correspondence. 
Routing  Foreign  Letters. — It  is  quite  unnecessary,  as  it  is 
usually  inadvisable,   to  attempt  to  indicate  in  addressing  en- 
velopes the  route  or  the  steamer. by  which  the  postal  officials  are 
expected   to   forward   a  letter.     Our  American   post   office   in- 
variably despatches  mails  by  the   fastest  possible  routes  and, 
although  its  clerks  are  not  infallible,  it  may  be  trusted  in  this 
regard.     The  British  and  some  other  post  offices  do  not  always 
follow  the  same  plan,  sometimes  holding  mails  for  despatch  by 
national   steamers  to   which   postal   subventions   are   paid.     In 
this  country,  however,  no  advantage  is  derived  from  indicating 
the  route  or  the  steamer  to  be  employed  by  the  post  office,  ex- 
cepting  when   duplicates   of   correspondence   or   of   documents 


112  PRACTICAL  EXPORTING 

are  to  be  forwarded  by  separate  boats  or  routes  in  order  to 
minimize  risk  of  loss  in  transit,  a  highly  desirable  practice. 

Correspondence  Files. — Whatever  the  nature  of  letters  re- 
ceived regarding  export  trade,  those  letters  should  preferably 
be  filed  in  the  export  department,  separate  and  distinct  from 
all  other  correspondence  of  the  house.  Since  such  letters  will 
often  contain  matters  of  interest  or  importance  to  numerous  other 
departments,  and  it  may  therefore  be  desired  to  have  them  in  the 
files  of  such  other  departments  or  in  the  general  house  files,  this 
result  can  be  secured  by  making  copies  of  the  letters,  or  excerpts 
from  them,  for  the  use  of  the  different  departments  concerned. 

The  development  of  an  export  trade  will  involve  a  rather 
heavy  correspondence  not  only  from  abroad  but  from  all  sorts 
of  people  in  our  country — from  export  commission  houses,  rail- 
way and  steamship  companies,  forwarding  agents,  banks,  etc. 
Methods  of  filing  these  letters  will  necessarily  vary  according 
to  the  systems  adopted  or  the  policies  of  each  ofSce.  In  prin- 
ciple, however,  it  will  be  found  desirable  to  separate  foreign 
from  domestic  letters  in  the  files.  Many  houses  have  thought 
it  advisable  in  order  to  keep  together  all  references  to  a  given 
business  transaction  to  make  an  excerpt  or  a  precis  from  each 
of  many  different  letters  that  may  be  received  referring  to  the 
execution  of  an  order,  its  shipping,  its  financing,  etc.,  filing 
originals  separately  but  attaching  the  relative  memoranda  to 
the  customer's  own  letter.  Sometimes  this  is  done  on  cards 
and  the  whole  transaction  is  recorded  in  a  card  index  cabinet. 

How  to  index  foreign  letters  would  by  itself  form  the  subject 
for  an  extended  chapter.  Uniformity  in  filing  and  indexing 
should  be  the  aim,  for  unless  a  uniform  system  is  devised  and 
adhered  to  it  will  be  found  difficult  if  not  impossible,  with  the 
development  of  an  extended  business,  to  refer  to  all  the  papers 
from  a  given  correspondent.  For  example,  names  involving 
"de"  or  "von"  may  either  be  filed  under  "D"  or  "V,"  as 
the  case  may  be,  or  they  may  be  filed  under  the  first  letter  of 
the  name  which  they  qualify.  Whichever  principle  is  adopted 
should  be  invariably  maintained,  otherwise  letters  from  the 
same  person  may  be  filed  in  two  or  three  different  places.  In 
spite  of  the  prevalence  of  such  names  and  the  consequent  pos- 
sible encumbering  of  the  divisions  of  the  files  referring  to  them, 


-      THE  EXPORT  DEPARTMENT  113 

it  is  usually  regarded  best  to  file  such  letters  under  D  or  V. 
Numerous  other  variations  in  foreign  firm  styles  call  for  the 
intelligent  attention  of  the  export  manager  in  devising  proper 
filing  systems  and  supply  another  reason  for  the  location  of 
such  systems  in  the  export  department  itself. 

Mailing  Lists. — Almost  the  first  essential  of  any  export  de- 
partment is  the  compilation  and  maintenance  up  to  date  of  as 
complete  and  comprehensive  a  mailing  list  of  foreign  prospects 
as  can  in  any  way  be  collected.  How  to  secure  such  mailing 
lists  may  be  a  puzzle  to  the  beginner.  There  are  many  sources 
of  information,  but  extreme  care  should  be  exercised  in  the  pur- 
chase of  lists  of  names  that  are  sometimes  offered  to  exporters. 
Some  of  them  are  honestly  compiled,  others  do  not  merit  that 
description.  In  any  case,  lists  in  any  given  market  will  vary 
according  to  the  personality  of  the  compiler;  one  will  always 
be  found  to  differ  in  some  respects  from  another,  including 
some  names  and  excluding  others.  The  exporter  has  at  his  dis- 
position several  world's  trade  directories,  the  best  of  which  is 
undoubtedly  Kelly's.  The  Bureau  of  Foreign  and  Domestic 
Commerce  of  the  Department  of  Commerce  at  Washington  has 
printed  several  directories  of  merchants  and  importers  in  vari- 
ous countries,  all  now  out  of  print,  supplemented  by  trade 
lists  in  special  foreign  countries.  The  advertiser  in  the 
modern  export  trade  paper  is  entitled,  without  extra  charge, 
to  information  regarding  trade  in  his  particular  line  in  the 
principal  markets  of  the  world.  In  addition  to  the  use  of  such 
sources  of  information  the  export  manager  must  continually 
keep  eyes  and  ears  wide  open  to  every  scrap  of  information 
he  can  gather  relating  to  foreign  markets  in  general,  especially 
to  the  names  of  posible  customers  for  his  goods  abroad.  The 
compilation  of  a  complete  mailing  list  will  progress  slowly  and 
be  developed  from  a  basis  obtained  as  has  just  been  suggested. 
It  should  receive  the  thought  and  study  of  the  export  manager 
day  by  day  and  should  never  be  neglected ;  the  work  should  never 
be  suffered  to  fall  behind. 

Card  Indexes.— Mailing  lists  should  preferably  be  in  the 
form  of  a  card  index  system,  arranged  by  cities  under  the  coun- 
tries to  which  they  belong.  Scores  of  varying  practices  pre- 
vail as  to  the  nature  of  the  cards  that  are  written.  If  nothing 
more,  each  card  must  state  name,  street  address,  city,  coun- 


114  PRACTICAL  EXPORTING 

try  of  the  prospect  and  the  kind  of  business  in  which  he  is  en- 
gaged. Some  houses  include  on  one  and  the  same  card  informa- 
tion received  as  to  the  financial  rating  of  the  house  indexed. 
Some  houses  even  provide  on  one  card  for  records  of  corre- 
spondence exchanged,  orders,  shipments  and  general  instruc- 
tions relating  to  business.  On  the  other  hand,  it  is  sometimes 
believed  better  to  have  separate  cards  for  these  several  details, 
sometimes  for  example  using  a  white  card  for  name,  address 
and  indication  of  businss  in  which  engaged,  colored  cards  for 
other  details — a  blue  card,  perhaps,  for  financial  reports  that 
are  received  regarding  the  same  house,  a  pink  card  for  a  record 
of  correspondence  exchanged,  and  perhaps  a  yellow  card  for  a 
record  of  orders  and  shipments. 

Sometimes  all  of  these  cards  are  kept  together  in  one  index 
drawer,  sometimes  the  cards  are  separated  into  special  drawers, 
each  referring  to  one  phase  of  business  relations.  Sometimes 
an  index  of  prospects  is  maintained  separately,  and  when  a 
prospect  is  turned  into  a  customer  his  card  is  removed  and 
placed  in  a  distinct  customer  file.  These  are  details  which 
each  export  manager  must  work  out  as  may  seem  best  to  him, 
or  as  the  policy  and  procedure  of  his  whole  office  may  indicate 
as  preferable.  But  always  every  scrap  of  information  that 
can  be  obtained  regarding  a  prospect  or  a  customer,  personali- 
ties of  the  partners,  kinds  of  goods  handled,  other  firms  from 
whom  goods  are  bought,  etc.,  should  be  sought  on  every  possi- 
ble occasion  and  be  promptly  entered  on  appropriate  cards  re- 
lating to  him.  Moreover,  since  such  an  index  in  the  case  of  a 
really  progressive  export  department  is  bound  to  grow  fast 
and  continuously,  adequate  provision  should  be  made  for  its 
expansion  from  time  to  time. 

A  special  file  for  agents  is  often  to  be  recommended.  The 
establishment  of  a  chain  of  agencies  as  nearly  complete  and 
perfect  as  possible  is  indispensable  to  fullest  export  success. 
Close,  constant  and  continuous  relations  must  be  established 
and  maintained.  The  card  index  devoted  to  them  may  be 
something  more  than  a  mere  record  of  correspondence  exchanged 
or  orders  received — it  may  be  full  of  personal  hints,  individual 
idiosyncrasies,  suggestions  received  and  given — anything  that 
may  help  in  developing  enthusiasm. 


THE  EXPORT  DEPARTMENT  115 

Order  Records. — The  export  manager  should  be  held  re- 
sponsible so  far  as  circumstances  allow,  or  indeed  ought  to  make 
himself  responsible  for  the  right  transaction  of  every  relation 
of  factory  and  foreign  correspondent.  This  applies  not  merely 
to  the  exchange  of  letters  but  to  the  execution  of  orders.  No 
great  amount  of  detail  or  red  tape  is  necessarily  invoked. 
Moreover,  since  the  growth  of  any  one's  export  trade  is  quite 
sure  to  be  gradual,  usually  progressing  with  some  deliberation 
from  small  beginnings  to  more  frequent  and  larger  transac- 
tions, there  is  almost  always  time  and  opportunity  for  a  bright 
man  to  evolve  systems  and  procedure  that  seem  adequate  and 
best  suited  to  his  particular  requirements. 

It  is  certainly  tiiie  that  special  precautions  are  necessary  in 
the  execution  of  foreign  orders.  To  ensure  attention  to  them 
is  the  part  of  the  export  manager.  He  should  be  the  one  to 
instruct  the  various  factory  and  department  heads  as  to  the 
peculiar  requirements  attaching  to  each  of  his  export  orders, 
and  he  should  keep  before  him  a  record  of  the  progress  of  each 
order  from  its  start  in  the  factory  until  its  final  despatch  by 
steamship.  He  may  keep  such  a  record,  preferably  perhaps,  in 
the  form  of  a  special  card  which  should  have  spaces  reserved 
for  memoranda  of  the  instructions  given,  the  date  when  the 
goods  enter  the  works,  when  they  should  be  finished,  what  sail- 
ing date  it  is  planned  to  make  and,  finally,  particulars  of  the 
actual  shipping  dates,  dates  for  mailing  of  documents,  etc. 

Instructions  given  other  factory  departments  must  obviously 
vary  according  to  each  organization.  They  should  include  in- 
structions to  the  bookkeepers'  or  invoicing  department ;  instruc- 
tions to  the  packing  department,  including  even  details  re- 
quired for  packing  lists,  the  gross,  net  and  legal  weights  in 
pounds  or  kilos  and  the  measurements  of  the  cases ;  instructions 
to  the  shipping  department  as  to  marks  and  numbers  and  how 
they  are  to  be  applied — all  in  addition  to  special  instructions 
regarding  peculiarities  necessary  to  be  included  in  manufac- 
turing processes.  Sometimes  these  instructions  to  other  de- 
partments are  conveyed  in  individual  slips  or  cards,  sometimes 
a  blanket  sheet  is  employed  including  all  details  under  sep- 
arate headings  applying  to  different  departments,  which  sheet 
is  attached  to  the  usual  order  form  that  is  made  out  and  is 


116  PRACTICAL  EXPORTING 

similar  in  size  to  the  latter,  but  preferably  printed  on  a  differ- 
ently colored  paper. 

Record  of  Foreign  Requirements.— Arranged  by  countries 
or  sometimes  by  principal  ports,  there  should  always  be  kept 
a  record  of  the  general  rules  governing  transactions  therewith. 
Regulations,  national  or  local,  regarding  consular  invoices, 
marks  on  packages,  weights  and  how  calculated  by  custom 
houses,  advices  regarding  a  manuacturer 's  peculiar  products 
whenever  they  have  been  received;  data  regarding  shipping 
lines,  routes,  etc.,  and  in  general  any  helpful  details  there  are  to 
be  remembered  or  that  should  be  available  for  instant  reference. 
Records  of  this  sort  may  be  made  on  cards  and  a  separate  file 
maintained  for  them,  or  they  may  be  indexed  in  a  general  file 
under  country  or  city  sub-divisions.  Again,  some  manufac- 
turers prefer  to  keep  records  of  this  sort  in  loose-leaf  books 
appropriately  indexed. 

Correspondence  EflEiciency  Record.-^It  will  almost  always 
be  found  a  valuable  gtiide  in  the  development  of  export  busi- 
ness to  keep  a  record  of  actual  results  obtained  from  various 
ways  of  soliciting  orders.  The  best  plan  perhaps  is  to  keep 
a  scrap  book  into  which  are  pasted  samples  of  circular  letters 
and  follow-ups  that  are  devised  from  time  to  time,  proofs  of 
advertisements  aimed  at  foreign  buyers,  printed  circulars, 
folders,  etc.  Catalogues  and  circulars,  even  follow-up  letters, 
like  advertisements,  should  always  be  keyed  in  order  that  re- 
sulting inquiries  and  ultimately  orders  may  be  properly  cred- 
ited. A  record  of  returns  received  both  in  the  way  of  inquiries 
and  actual  business  will  be  a  valuable  guide  as  to  the  effectiveness 
of  different  forms,  language,  arguments.  Such  a  record  ought 
never  be  definitely  closed,  for  it  is  by  no  means  unusual  in  the  ex- 
port trade  to  receive  replies  to  advertisements  and  circular  letters 
two  or  three  or  many  years  after  they  have  been  sent  abroad. 

LANGUAGES  AND  TRANSLATIONS 

It  must  be  clear  enough  that  there  is  always  an  enormous 
advantage  in  talking  to  one's  customer  in  a  language  which  he 
quickly  and  clearly  understands.  To  write  letters  in  English 
soliciting  orders  from  a  man  who  speaks  only  French  involves 
his  getting  some  one  to  translate  the  letter  for  him,  and  if  he 


TEE  EXPORT  DEPARTMENT  117 

has  to  pay  money  for  having  such  a  translation  made,  his  dis- 
gust on  finding  it  merely  a  "drumming"  letter  is  correspond- 
ingly increased.  To  ask  a  man  in  France  or  a  man  in  Peru  to 
buy  one's  goods,  using  the  English  language  when  one  does 
not  know  that  the  prospect  in  question  is  able  to  read  English, 
will  have  much  the  same  effect  on  them  as  would  be  the  effect 
on  the  American  were  he  to  receive  a  letter  from  a  Russian  ex- 
porter suggesting  in  the  Russian  language  the  propriety  of 
placing  an  order  for  some  Russian  products.  The  question  of 
languages  to  be  employed  in  letters  and  also  in  printed  matter 
is  therefore  a  higlily  important  one. 

Lang-uage  of  the  Customer. — To  some  extent  the  language  to 
be  used  in  correspondence  with  prospects  abroad  is  governed  by 
the  language  spoken  in  the  prospect's  country,  but  to  some 
extent  also  it  is  governed  by  other  considerations.  Something 
depends,  for  example,  upon  the  distribution  to  be  given  to  the 
correspondence  in  question.  If  it  is  intended  for  the  ultimate 
consumer  or  for  small  retail  traders,  then  the  common  lan- 
guage of  the  country  must  be  employed.  If,  however,  the  cor- 
respondence is  aimed  at  the  big  buyers,  the  wholesalers  and  im- 
porters in  a  given  market,  then  either  the  local  language  of 
that  market,  or  in  some  cases  one  of  the  four  great  commercial 
languages  of  the  world,  may  be  used.  Throughout  Latin  Amer- 
ica it  will  be  found  that  many  of  the  largest  importers  are  of 
other  than  Latin  nationality.  That  is,  there  are  many  German 
and  English  houses  established  in  these  countries  whose  native 
languages  may  sometimes  be  used  instead  of  the  language  of 
their  adopted  country,  if  more  convenient  to  do  so. 

In  the  practice  of  the  average  American  exporter,  doing  busi- 
ness only  with  large  importers  in  foreign  countries,  it  will  be 
found  that  four  languages  are  all  that  is  necessary  to  employ, 
namely,  English,  French,  Spanish,  and  German.  It  is  quite 
needless  to  use  the  minor  tongues — Italian,  Danish,  Swedish, 
even  Russian — while  correspondents  who  write  or  seek  letters  in 
Arabic,  Malaysian,  Chinese  or  Japanese  may  properly  be  "for- 
gotten." The  large  merchants  in  all  countries  thoroughly  un- 
derstand one  of  the  four  commercial  languages  of  the  world  and 
are  able  to  carry  on  correspondence  in  such  a  language.  Others 
are  sure  to  be  customers  of  insignificant  importance. 


118  PRACTICAL  EXPOBTING 

On  the  other  hand,  the  question  of  the  use  of  the  Portuguese 
language  is  a  problem  of  different  nature.  It  is  largely  one  of 
policy  and  applies  chiefly  to  trade  with  Brazil,  Brazil,  it  will 
be  remembered,  was  originally  a  Portuguese,  not  a  Spanish 
colony.  It  was  ruled  for  many  years  by  emigrant  emperors 
from  Portugal.  The  Braziilians  are  intensely  proud  of  having 
their  own  language  and  are  disposed  to  be  offended  if  they 
seem  to  be  confounded  with  other  South  Americans  when  letters 
are  addressed  to  them  in  the  Spanish  language.  Moreover, 
there  is  a  little  jealousy  in  Brazil  of  the  neighboring  Republic 
of  Argentina.  The  Brazilians  do  not  like  to  feel  that  they  are 
playing  "second  fiddle"  to  the  Argentines.  On  these  accounts 
the  exporter  will  do  well  to  add  Portuguese  to  the  other  four 
languages  which  have  been  called  the  great  commercial  tongues 
of  the  world,  even  though  every  large  importer  either  in  Portu- 
gal or  in  Brazil  would  be  quite  able  to  read  the  Spanish  or  the 
French  language.  But  it  is  to  be  noted  that  some  of  the  largest 
importing  houses  in  Brazil  are  either  of  English  or  German 
birth ;  with  them  one  of  these  other  languages  may  be  employed. 

There  are  probably  few  houses  the  world  over  which  make 
importing  their  business  which  do  not  have>  some  clerks  in  their 
employ  who  read  English  even  if  the  principals  do  not.  Many 
a  man,  too,  is  able  to  read  a  language  when  he  cannot  write  or 
speak  it.  This  does  not  detract  from  the  advantage  of  ap- 
proaching such  concerns  in  the  language  they  habitually  employ 
in  business  and  therefore  understand  best.  The  study  of  geog- 
raphy, which  has  already  been  urged,  will  materially  help  in  de- 
termining the  languages  to  be  employed  in  the  case  of  the 
world's  markets.  It  is  common  enough  to  say  that  Spanish  is 
the  language  of  "South  America,"  but  we  have  just  noted  that 
this  is  not  the  language  of  Brazil,  nor  is  it  the  language  of  the 
Guianas — British  Guiana,  Dutch  Guiana  and  French  Guiana. 
Furthermore,  Spanish  is  also  the  language  of  Central  America 
and  Mexico.  But  because  Spanish  is  the  language  of  Cuba, 
Porto  Rico  and  Santo  Domingo,  it  does  not  follow  that  it  is  also 
the  language  of  all  the  other  West  India  Islands.  No  manu- 
facturer can  be  excused  for  addressing  people  in  Jamaica  in  the 
Spanish  language.  Jamaica  is  a  British  colony  with  English  as 
its  language,  and  Spanish  is  just  as  strange  and  foreign  there 


THE  EXPORT  DEPARTMENT  119 

as  it  would  be  in  Chicago.     There  are  many  other  English  pos- 
sessions in  the  West  Indies,  but  in  Haiti  French  is  spoken. 

What  Languages  and  Where. — In  the  choice  of  languages  to 
be  used  in  preparing  letters  and  also  printed  matter,  one,  or 
three  or  four,  other  than  English  may  be  selected.  The  French 
language  may  be  used  for  correspondence  not  only  with  France 
and  French  colonies  all  over  the  world,  but  for  Belgium,  the 
western  end  of  Switzerland  centering  about  Lake  Geneva,  for 
Italy,  for  Turkey,  Greece,  Egypt  and  the  whole  Mediterranean 
district,  etc.  The  German  language  answers  for  the  German 
Empire,  Austria  and  Hungary,  for  most  of  Switzerland,  for 
German  colonies  and  for  German  merchants  established  in  many 
different  countries.  Spanish  covers  all  of  Spain,  Central  and 
South  America  (with  the  exceptions  of  Brazil  and  the  Guianas), 
Mexico,  Cuba,  Porto  Rico,  Santo  Domingo,  and  the  Philippine 
Islands.  Portuguese  is  only  useful  for  Portugal,  Brazil  and 
Portuguese  colonies  in  East  and  West  Africa.  English  is  un- 
doubtedly the  most  widely  spread  and  most  generally  used  com- 
mercial tongue  of  the  world.  No  other  language  is  necessar^^  in 
cultivating  trade  in  Great  Britain  and  the  scores  of  British  col- 
onies scattered  all  over  the  face  of  the  globe,  including  Austral- 
asia, South  Africa,  and  British  India.  English  also  is  the 
commercial  language  of  the  Far  East,  China  and  Japan,  and  is 
the  best  language  to  use  in  correspondence  with  Holland,  Den- 
mark, Norway  and  Sweden. 

The  question  of  what  language  to  use  in  addressing  firms  in 
Russia  is  one  about  which  there  may  be  some  doubt.  Prior  to 
the  outbreak  of  the  European  War  German  was  the  usual  com- 
mercial language  of  large  concerns  throughout  Russia.  The 
greater  part  of  the  large  traders  of  Russia  were  Jews  using  Ger- 
man commercially  in  preference  to  other  languages.  Preju- 
dice in  Russia  against  everything  German,  including  the  lan- 
guage, seems  to  have  evaporated  and  German  is  likely  to  re- 
establish itself  as  the  commercial  language  throughout  the 
empire.  French  has  been  the  language  of  high  society  in  Rus- 
sia, but  it  is  doubtful  whether  it  will  ever  develop  into  a  widely 
used  commercial  tongue  there.  On  the  other  hand,  compara- 
tively few  of  the  common  people  of  Russia,  or  of  the  smaller 
shopkeepers,  speak  or  read  any  but  their  own  tongue. 


120  PRACTICAL  EXPORTING 

Translations. — The  manufacturer  nowadays  has  all  sorts  of 
opportunities  for  securing  translations  of  his  letters  and  cata- 
logues. There  are  innumerable  translation  bureaus  to  be  found 
in  every  principal  city  of  the  country.  It  is  part  of  the  service 
which  the  export  trade  paper  offers  to  its  advertisers,  that  corre- 
spondence arising  out  of  such  advertisements  is  translated  from 
and  into  the  necessary  foreign  Innguagos,  if  desired.  When 
necessary  to  buy  translations,  first  attention  ought  to  be  given  to 
the  ability  of  the  translator  and  not  to  the  price  charged.  Many 
a  supremely  ridiculous  mistake  made  by  ignorant  translators, 
who  either  have  not  comprehended  the  English  original  or  have 
not  been  competent  in  the  languages  which  they  attempted  to 
use,  has  nullified  possible  good  effects  from  letters  entrusted  to 
them.  Many  a  blunder  costly  to  manufacturers  has  been  made 
by  incompetent  translators  of  letters  and  orders  from  foreign 
customers. 

The  principle  of  employing  the  best  available  translation  serv- 
ice applies  to  all  general  correspondence,  but  especial  emphasis 
must  be  laid  on  it  when  it  is  a  question  of  technical  terms  and 
descriptions.  All  letters  and  printed  matter  intended  for  dis- 
tribution in  foreign  countries  should  be  absolutely  exact  as  well 
as  clear  and  simple  in  terms.  No  mistakes  or  misapprehensions 
must  be  possible.  Furthermore,  it  is  out  of  the  question  to 
translate  literally  many  of  our  customary  expressions,  and  the 
translators  employed  must  aim  to  paraphrase  such  expressions 
in  a  manner  that  will  be  intelligible  to  our  correspondents.  A 
cheap  and  amateur  translator  who  transforms  a  hundred  dozen 
into  a  hundred  gross  must  be  avoided  at  any  cost. 

Translators  and  Their  Charges. — Prices  charged  by  fully 
competent  translators  run  about  as  follows:  From  Spanish, 
French,  German,  Portuguese  and  Italian  into  English  and  vice 
versa  60  cents  per  100  words ;  from  and  into  Russian,  Dutch  and 
the  Scandinavian  languages  $1  per  100  words.  Such  rates 
apply  usually  to  correspondence  only.  Technical  catalogue 
translations  sometimes  cost  a  little  more. 

When  a  thoroughly  dependable  translator  has  been  chosen, 
considerable  leeway  should  be  given  him  in  rendering  the  Eng- 
lish original  into  the  appropriate  foreign  language.  The  force 
of  a  letter  or  of  a  printed  page  may  be  considerably  increased 


TEE  EXPORT  DEPARTMENT  121 

if  put  in  idiomatic  fashion  in  the  foreign  language  instead  of 
merely  producing  a  literal,  word  for  word  translation  of  the 
English.  The  foreign  language  involved  should  be  pure  in 
style  according  to  the  best  usage  of  that  language.  Local  terms 
for  the  same  thing  vary  in  all  languages  according  to  country, 
section  or  district.  There  is  a  good  deal  of  difference  between 
Brazilian  Portuguese  and  the  Portuguese  spoken  and  written  in 
Portugal  itself.  Many  articles  known  by  a  certain  name  in 
Spain  bear  quite  different  names  in  ]\Iexico  or  Argentina.  Even 
the  common  egg  is  locally  referred  to  by  several  different  terms 
in  different  Latin  American  countries.  When  it  comes  to 
modern  machinery  there  are  more  often  than  not  no  exact  equiva- 
lents in  the  Spanish  language,  and  terms  adopted  in  Colombia 
may  be  utterly  unlike  those  used  in  Chile. 

Probably  the  translator  does  not  exist  who  is  intimately  ac- 
quainted with  all  of  the  local  expressions  used  among  different 
countries  for  referring  to  the  same  subject  matter  in  every  pos- 
sible connection.  A  translator  who  is  a  native  of  Venezuela 
knows,  of  course,  the  ordinary  terms  applied  to  a  certain  com- 
modity in  his  own  country.  Perhaps  he  may  know  varying 
practice  in  different  countries  as  applied  to  one  or  two  com- 
modities. He  will  hardly  know  all  terms  given  to  all  commodi- 
ties in  every  country  where  Spanish  is  used.  Where  exact 
terms  in  a  given  district  are  positively  known,  then  it  is  well  to 
employ  them,  but  it  will  not  do  to  assume  that  such  local  usage 
of  words  extends  in  all  directions,  and  it  is  much  better  when 
there  is  any  doubt  on  this  score  to  demand  the  use  of  pure  and 
idiomatic  Castilian,  rather  than  local  Spanish  slang. 

Criticism  of  translations  is  easy  and  is  quite  too  frequently 
made.  We  have  to  remember  that  in  writing  our  native  English 
one  of  us  uses  certain  expressions  which  our  friends  may  criticize 
severely.  Our  style  and  our  friend's  style  in  the  use  of  the  Eng- 
lish language  may  differ  materially.  It  is  precisely  so  in  every 
other  language.  The  best  authors  in  all  countries  have  bitter  crit- 
ics. Style  and  phraseology  in  business  correspondence  are  not 
vital,  so  long  as  the  desired  accuracy  and  force  are  transmitted. 

DEVELOPING  EXPORT  BUSINESS 

It  was  suggested  in  Chapter  I  that  in  a  general  way  there 


122  PRACTICAL  EXPORTING 

are  four  means  of  getting  and  developing  an  export  business. 
These  were  enumerated  as:  (1)  by  means  of  correspondence, 
(2)  through  traveling  salesmen,  (3)  by  advertising,  (4)  by 
utilizing  New  York  or  other  American  export  commission  houses. 
To  these  may  be  added  one  more,  which  is  often  a  development 
from  or  an  adjunct  to  the  others.  This  is:  (5)  through  local 
commission  agents  domiciled  in  foreign  markets. 

Ways  of  Getting  Export  Trade. — Every  one  of  these  means 
ought  to  be  employed  by  the  manufacturer  aggressively  in 
earnest  about  developing  his  foreign  interests  to  the  largest  pos- 
sible extent.  Yet  in  the  export  trade,  as  always,  conditions 
must  govern.  In  one  market  one  means  may  be  employed, 
while  in  another  market  quite  other  means  will  be  utilized. 
Eternal  vigilance  is  the  price  of  the  largest  trade  development 
in  each  direction.  The  export  manager  must  be  eternally  and 
eagerly  on  the  watch  for  opportunities,  yet  in  the  export  trade, 
so  far  as  opportunities  are  'concerned,  it  should  be  by  no  means  a 
case  of  first  come,  first  served.  The  right  man  in  each  place 
must  be  sought.  This  does  not  mean,  in  foreign  countries  any 
more  than  in  our  own,  that  the  biggest  man  is  always  the  most 
desirable.  He  may  be  too  big  and  too  busy ;  he  may  have  a 
neighbor  smaller,  poorer,  but  of  the  right  character  and  of  suit- 
able enterprise  and  push. 

A  fascinating  problem,  this  of  getting  one's  self  established — 
in  the  right  way — in  each  one  of  the  great  foreign  markets  for 
one's  goods.  It  is  by  no  means  so  intricate  a  problem,  so  diffi- 
cult or  so  discouraging,  as  a  manufacturer's  first  efforts  in  a  new 
domestic  territory  are  likely  to  be.  " 

The  whole  world  has  always  looked  to  the  United  States  for 
novelties,  foreign  merchants  expect  from  us  something  new,  at 
least  improvements  of  some  sort  on  older  goods  with  which  they 
have  been  familiar.  This  helps  every  American  manufacturer 
materially.  It  virtually  ensures  attention  to  his  claims,  if  they 
are  only  presented  effectively.  The  result  is  morally  certain  to 
be  an  order  for  samples  when  the  foreign  buyer  is  properly  im- 
pressed by  the  intelligent  first  efforts  of  the  American  seller. 
Later  efforts  of  the  same  description,  when  the  intrinsic  value 
of  the  goods  backs  up  the  claims  made  for  them,  are  bound  to 
build  up  the  manufacturer's  future  and  permanent  trade. 


CHAPTER  V 

FOREIGN  TRADE  CORRESPONDENCE 

Correspondence  a  Vital  Element  in  Getting  and  Handling  Ex- 
port Business — General  Character  of  Letters  to  'and  from 
Foreign  Countries — Inquiries  for  Goods  and  Replies  to  Them 
— Sales  Letters,  Circular  Letters  and  Follow-Up  Systems — 
The  Use  of  the  Cable. 

WHATEVER  other  means  are  adopted  for  initiating 
and  for  buildi  .g  up  an  export  trade,  supreme  impor- 
tance must  always  attach  to  one's  foreign  corre- 
spondence. It  may  with  entire  safety  be  declared  that  there 
does  not  exist  an  exporter  in  the  United  States  or  in  any  other 
country  M^ho  has  not  on  his  books  some  foreign  customers  whom 
he  has  never  seen,  and  whom  no  traveling  man  of  his  has  ever 
called  upon,  whose  business  has  been  established  and  developed 
solely  through  the  mails.  It  follows  that  no  matter  what  other 
efforts  to  get  and  to  increase  foreign  business  are  put  forth,  it 
is  essential  that  first  importance  be  given  to  the  question  of  the 
proper  conduct  of  foreign  correspondence. 

GENERAL  CHARACTER  OF  FOREIGN  CORRESPOND- 
ENCE 

Correspondence,  being  the  very  backbone  of  all  export  trade, 
demands  the  most  serious  study  of  every  man  who  is  really  in 
earnest  in  his  efforts  to  increase  his  business  and  his  profits 
through  orders  from  foreign  countries.  We  are  told  often 
enough  that  it  is  quite  impossible  to  get  any  business  b}^  catalogue 
or  by  letter,  that  the  visit  of  a  traveling  salesman  is  indispen- 
sable. No  one,  however,  has  ever  anticipated  a  reply,  to  say 
nothing  of  an  order,  from  each  and  every  sales  letter  mailed 
abroad  or  at  home.  Perhaps  if  only  one  or  two  interested  re- 
plies are  received  from  every  hundred  circular  letters  of  the 
best  sort  that  are  despatched  to  possible  foreign  buyers,  perhaps 

123 


124  PRACTICAL  EXPORTING 

if  as  a  result  of  efforts  to  develop  actual  orders  only  one  real 
customer  is  ultimately  received  from  a  thousand  circular  letters, 
still  it  can  be  mathematically  demonstrated  that  in  proportion  to 
costs  the  effort  has  paid,  and  paid  well.  A  customer  has  been 
established.  The  question  is  not  one  of  the  volume  of  the  first 
order,  but  of  trade  to  follow  during  many  future  years.  More- 
over, the  establishment  of  one  customer  or  agent  makes  enor- 
mously more  easy  the  later  establishment  of  many  another  in  the 
same,  in  tributary,  and  in  neighboring  territories. 

Foreign  correspondence,  however,  includes  more  than  mere 
circular  letters.  It  includes  the  development  of  business  abroad 
established  in  any  one  of  several  different  ways.  It  includes 
the  successful,  profitable  and  mutually  satisfactory  conduct  of 
all  business  relations  with  customers  during  long  periods  of 
time.  It  includes  the  adjustment  by  mail  of  the  little  troubles 
and  misunderstandings  that  are  unavoidable  in  the  carrying  on 
of  any  sort  of  business  at  home  or  abroad.  It  includes  the  active 
and  interested  support  of  agents  in  foreign  markets. 

So  important  is  this  form  of  export  activity  that  unlimited 
thought  and  study  must  be  given  it  by  the  export  manager.  It 
deserves  a  special  course  in  our  commercial  schools  and  col- 
leges. Some  of  the  elementary  principles,  only,  underlying  the 
conduct  of  foreign  correspondence,  can  we  here  consider  briefly. 

Mail  Time  to  Foreign  Markets. — Stories  have  been  told  of 
American  manufacturers  who  addressed  letters  to  Manila, 
Philippine  Islands,  and  ten  days  later  wrote  vigorous  complaints 
that  no  answers  had  been  received.  The  Philippines  are  a  long 
ways  off,  half  way  'round  the  world  from  us.  There  are  no  ex- 
press trains  between  Chicago  and  Manila.  There  are  not  even 
mail  steamers  every  two  or  three  days  from  San  Francisco  or 
Puget  Sound.  It  is  not  merely  a  question  of  reaching  a  point 
13,000  miles  distant ;  it  is  one  of  catching  steamers  and  of  weeks 
of  time.  The  exporter  who  addresses  a  letter  to  Sydney,  Aus- 
tralia, or  to  Buenos  Aires,  Argentine  Republic,  must  remember 
that  his  letter  will  be  at  least  thirty  days  en  route.  His  corre- 
spondent's reply  will  occupy  thirty  days  in  transit  back  to  the 
United  States;  allowing  a  reasonable  leeway  for  the  considera- 
tion and  the  writing  of  the  reply,  for  delay  in  despatch  of  later 
mail  steamers,  it  is  clear  that  the  exporter  cannot  "hope  to  re- 


FOREIGN  TRADE  CORRESPONDENCE  125 

ceive  an  answer  from  points  like  those  mentioned  inside  of  ten 
weeks  from  date  of  his  first  letter.  Very  likely  eleven  or  twelve 
weeks  will  be  the  best  that  he  can  expect.  Even  in  normal  times, 
when  steamship  services  have  been  uninterrupted,  three  weeks 
have  often  been  required  to  receive  answers  in  New  York  from 
agents  or  correspondents  in  London,  even  expecting  their 
promptest  attention. 

Some  of  our  foreign  markets  seem  on  the  maps  very  close  to 
us.  We  may  understand  that  it  is  possible  for  a  letter  from 
New  York  to  be  delivered  in  Havana,  Cuba,  in  three  days'  time. 
More  likely,  five  days  will  be  the  usual  course  of  mails.  We 
ought  not  to  count  on  replies  being  received  in  ten  days,  al- 
though in  exceptional  cases  that  might  happen.  Jamaica  does 
not  look  very  far  from  Cuba  when  we  inspect  the  maps,  but 
there  is  not  the  same  communication  between  this  country  and 
Jamaica.  We  can  expect  about  only  one  mail  a  week  and  five 
daA's  are  consumed  in  transit  from  New  York.  Obviously,  there- 
fore, replies  from  our  friends  in  Jamaica  ought  not  to  be  looked 
for  inside  of  three  weeks.  For  several  reasons,  as  will  shortly 
appear,  considerations  like  these  must  be  taken  into  account 
by  every  exporter. 

Export  Stationery. — If  in  other  countries  the  same  impor- 
tance is  not  attached  to  the  employment  of  artistic  or  cliar- 
acteristic  letter-heads  as  in  our  own,  that  by  no  means  argues 
that  the  best  of  our  stationery  does  not  cany  the  same  desirable 
impression  abroad  it  is  believed  to  carry  in  the  United  States. 
It  is  not  as  a  rule  necessary  to  devise  special  letter-heads  for 
foreign  use,  providing  always  that  the  form  employed  here  at 
home  is  dignified  and  otherwise  creditable.  It  is  neither  neces- 
sary nor  desirable  to  have  letter-heads  translated  into  foreign 
languages.  An  exception  may  be  made  for  circular  letter  use, 
where  advertising  value  in  the  letter-head  is  sought.  How- 
ever, for  the  use  of  the  export  department  it  may  sometimes  be 
worth  while  imprinting  regular  letter-heads  with  the  phrase 
"Export  Department"  coupled  sometimes  with  the  export  man- 
ager's individual  name.  Certainly  the  firm's  letter-head  for 
foreign  use  should  always  include  the  cable  address  and  the 
names  of  the  cable  codes  which  may  be  employed  in  telegraphic 
correspondence  with  it. 


126  PRACTICAL  EXPORTING 

American  business  houses  are  famous  for  the  quality  of  their 
business  stationery.  We  should  maintain  our  reputation  in  this 
regard.  Since  the  raising  of  the  minimum  weight  for  foreign 
letters  from  half  an  ounce  to  one  ounce,  there  no  longer  exists 
the  necessity  for  preparing  foreign  stationery  of  very  light 
weight,  nor  is  it  necessary  to  provide  square  envelopes  for  the 
export  department  in  imitation  of  certain  foreign  practices, 
unless  it  is  desired  to  have  them  as  a  means  of  differentiating  for- 
eign from  domestic  letters,  and  thus  ensuring  the  necessary 
special  postage  stamps,  as  has  already  been  suggested.  All  in 
all,  therefore,  it  would  seem  that  one's  usual  stationery  is  quite 
sufficient  for  his  foreign  correspondence  as  well.  Of  course,  the 
advertising  value  of  stationery  is  never  to  be  overlooked,  but  in 
foreign  letters  it  should  be  subordinate  to  the  dignity  and  for- 
mality which  are  always  highly  desirable  in  dealing  with  the  best 
class  of  foreign  merchants. 

Formality  in  Language. — Personalities  and  above  all  offensive 
impertinences  must  be  studiously  avoided  in  carrying  on  corre- 
spondence with  foreign  customers.  The  tone  of  our  letters  must 
always  be  courteous,  but  rather  formal  and  dignified  than  the 
contrary.  Anything  that  approximates  or  savors  of  American 
rilang  must  be  avoided  no  matter  how  effective  it  may  seem  to  us, 
because  the  chances  are  that  its  very  significance  will  be  missed 
by  our  foreign  correspondents.  They  will  not  understand  what 
we  mean.  It  is  true  that  some  of  our  slang  expressions  have 
made  their  way  into  some  foreign  countries,  but  this  is  by  no 
means  true  of  all  such  expressions,  nor  of  all  countries.  In  any 
case,  the  use  of  such  expressions  is  not  to  be  commended.  We 
ought  not  to  say,  for  example,  that  we  have  "a  cracka'jack  line," 
for  people  in  other  countries  will  not  appreciate  the  phrase  or 
guess  its  derivation  or  popular  use. 

The  foreign  business  letter  should  be  essentially  business.  It 
is  usually  addressed  to  large  or  important  business  establish- 
ments. The  same  phraseology  should  not,  therefore,  be  em- 
ployed that  is  a  favorite  in  some  of  our  American  mail-order 
business.  In  corresponding  with  foreign  "agents"  the  mistake 
has  sometimes  been  made  by  ignorant  American  concerns  of  send- 
ing the  trashy,  ill-bred  letters  that  are  used  in  this  country  in 
answering  replies  from  "want  ads,"  for  house-to-house  peddlers 


FOREIGN  TRADE  CORRESPONDENCE  127 

of  mail-order  goods.  Such  correspondence  addressed  to  foreign 
countries  is  an  insult  to  the  intelligence  and  the  breeding  of  the 
whole  American  people. 

Mr.  Wyman,  Export  Manager  of  Carter's  Ink  Company,  tells 
a  story  in  System  vividly  illustrating  this  point.  "No  other 
explanation  than  a  failure  to  take  the  other  man's  viewpoint 
could  be  responsible  for  a  letter  addressed  to  a  prominent  Cal- 
cutta merchant  which  was  started,  'Bill  Jones  of  Kalamazoo 
made  $1,800  in  one  month  with  our  patent  back-actioned  potato 
peeler.     Can 't  you  do  as  well  as  Bill  V  " 

A  signed  letter  is  regarded  in  other  countries  as  having  all  the 
formality  and  sanctity  of  a  contract.  Every  promise  made  in  a 
letter  must  be  fulfilled,  if  accepted  by  our  correspondents,  no 
matter  on  what  costly  blunders  or  errors  that  promise  may 
originally  have  been  founded.  We  shall  be  expected  by  our 
customers  abroad  to  -abide  by  our  written  word.  Care  must 
therefore  be  taken  to  write  nothing  which  we  are  not  prepared 
to  make  good,  and,  if  conditions  are  attached  to  clauses  in  our 
lettere,  then  studious  emphasis  must  be  placed  on  those  condi- 
tions, clearly  explained,  so  that  they  cannot  be  misunderstood 
at  the  other  end  of  the  line. 

Personalities  in  Foreign  Letters. — While  it  has  been  re- 
marked that  personalities  should  not  be  employed  in  foreign 
business  letters,  yet  like  most  other  rules  this  may  have  its  ex- 
ceptions. Where  an  actual  personal  acquaintance  exists  be- 
tween the  American  house  and  the  foreign  house,  or  between 
individual  members  of  both,  then  the  personal  element  may  mod- 
estly be  introduced  even  into  a  business  letter.  Yet,  it  is  doubt- 
ful if  a  separate  and  distinct  personal  enclosure  with  the 
fonnal  business  communication  w^ould  not  be  the  better.  How- 
ever, with  the  growth  of  correspondence  with  customers  through- 
out Latin  America  the  personal  touch  is  regarded  as  almost 
essential.  This  applies  especially  to  correspondence  with  cus- 
tomers of  Latin  blood,  and  distinction  must  be  made  between 
such  correspondents  and  other  business  houses  in  Latiu  America 
who  may  be  of  English,  German  or  other  nationality.^ 

1  "Between  the  purely  business  letters  always  couched  in  the  langruage 
which  is  suited  to  its  recipient  (and  it  is  as  fatal  to  write  redundant  let- 
ters to  Melbourne  as  it  is  crisp  'ginger'  to  Guayaquil)   the  personal  note 


128  PRACTICAL  EXPORTING 

Short  vs.  Long  Letters. — When  one  is  doing  business  or  trying 
to  do  business  with  customers  from  3,000  to  15,000  miles,  or, 
say,  from  three  weeks'  to  three  months'  mail  time,  distant  from 
us,  then  it  is  clear  that  other  rules  for  correspondence  than  those 
we  employ  at  home  may  well  be  considered.  It  is  almost  cer- 
tainly a  mistake  to  employ  what  Mr.  Wyman  has  called  our 
' ' '  condensed-efficiency-omit-dear-sir-and-yours-truly ' '  letter.  It 
should  be  our  object  to  tell  the  whole  story  in  each  letter,  to 
leave  nothing  to  imagination  or  to  guesswork  on  the  part  of  our 
foreign  correspondents.  The  short,  "snappy"  letter  is  re- 
garded by  many  here  at  home  as  distinguishing  the  best  corre- 
spondent. It  will  not  do  when  we  are  developing  business  in 
other  countries.  Our  correspondents  do  not  know  our  goods 
when  we  first  call  their  attention  to  them.  Possible  interest 
evoked  by  a  chance  phrase  or  paragraph  very  quickly  evaporates 
when  inquiries  have  to  be  made  for  particulars  and  many  weeks 
elapse  before  the  thing  is  made  clear.  Moreover,  throughout 
Latin  America  our  usual  brief  letter  is  regarded  as  brusque  and 
discourteous. 

Each  clause  and  each  phrase  in  every  letter  must  be  so  clear 
and  simple  that  a  child  can  understand  it  and  we  must  not  be 
stingy  with  the  paragraphs.  Far  better  to  have  two  or  three 
pages  of  them,  and  put  our  whole  position  fully  before  our  corre- 
spondents, than  to  delude  ourselves  with  the  expectation  that 
they  are  mind  readers.  This  always  providing,  of  course,  that 
we  tell  our  story  in  an  interesting  as  well  as  forceful  fashion. 
The  reader's  attention,  our  prospect's  attention,  must  be  en- 
listed and  riveted  from  the  start.  The  adroitness  of  the  letter 
writer  will  be  shown  in  maintaining  that  interest  through  to  the 
end.  Apologies  seem  necessary  when  we  write  two  and  three 
page  letters  here  at  home.     They  are  not  called  for  in  similar 

can  be  introduced  by  a  letter  on  the  export  manager's  personal  stationery 
asking  some  little  favor.  As  a  specific  example,  a  letter  asking  for  local 
photographs,  stamps,  and  semi-precious'  stones,  when  properly  worded  and 
accompanied  by  an  ample  remittance,  leads  graciously  to  some  small 
souvenir  to  reciprocate  the  courtesy  and  repay  in  part  the  inconvenience. 
When  you  begin  to  have  a  steady  outgoing  mail  which  includes  everything 
from  hymnals  to  royal  aiiction  score  pads,  when  your  correspondents  feel 
free  to  ask  you  to  select  seeds  for  their  garden  and  baby  carriages  for  their 
children,  you  may  rest  assured  that  your  low-priced  competition  will  beckon 
in  vain."     (Walter  F.  Wyman.) 


FOREIGN  TRADE  CORRESPONDENCE  1^9 

letters  addressed  to  other  countries.  It  is  not  the  bulk  or  the 
quantity  of  the  letter,  it  is  essentially  its  quality  that  counts. 
Everything  depends  on  what  we  say  and  how  we  say  it;  not  on 
the  number  of  lines  to  which  the  letter  runs. 

Composition  of  Foreign  Letters.— It  is  perhaps  in  connec- 
tion with  our  long  distance  correspondence  that  the  rule  espe- 
cially applies,  "put  yourself  in  the  other  man's  place."  Try  to 
picture  to  yourself  the  mental  attitude  of  an  important  mer- 
chant who  does  not  understand  your  goods  or  your  policy  or 
your  general  business,  who  may  very  likely  never  have  heard 
of  you  or  of  your  special  products  before ;  who  does  business  in 
a  little  different  way  in  some  respects  from  ways  in  vogne  in 
the  United  States,  who  lives  in  another  countr^^  where  possibly  a 
different  language  is  spoken,  or  where  even  the  English  language 
may  be  used  in  a  little  different  fashion  than  we  are  accustomed 
to  use  it — then  make  the  effort  to  appeal  to  such  a  correspondent 
in  a  way  to  bring  the  result  you  seek. 

There  are  some  rules  of  a  general  nature  that  may  be  laid 
down.  For  example,  there  are  the  complimentary  phrases  pre- 
ceding the  final  salutation  and  signature  to  a  letter.  Instead  of 
winding  up  with  the  commonplace  "Yours  truly,"  a  certain  ful- 
someness  is  never  mistaken  policy  in  foreign  letters.  If  nothing 
more,  we  may  say  "Awaiting  your  further  favors"  or  "We 
trust  that  we  may  have  the  pleasure  of  inaugurating  (or,  further 
developing)  an  extensive  and  profitable  trade  for  our  mutual 
benefit."  Again,  it  is  frequent  foreign  practice  to  sign  letters 
with  such  expressions  as,  "We  are,  gentlemen,  faithfully  yours," 
etc.  Our  English  cousins,  in  addressing  correspondents  whom 
they  especially  esteem  or  who  are  unusually  prominent  or  im- 
portant people,  sometimes  sign  "Your  obedient  servants,"  or 
"With  assurances  of  our  highest  respect  and  esteem."  These 
may  be  variations  of  the  antique  Spanish  form  which  never 
fails  to  cause  a  smile  when  an  American  first  understands  the 
translation  of  the  mystic  abbreviations  with  which  the  Spanish 
and  the  Spanish-American  sign,  "S.  S.  S.  q.  b.  s.  m."  This 
ancient  form,  which,  of  course,  long  ago  lost  its  literal  signifi- 
cance, translates  into  "Your  obedient  servant  who  kisses  your 
hand." 

In   writing   to   big   importers   and   the   larger   "department 


130  PRACTICAL  EXPORTING 

stores "  it  is  always  wise  to  address  by  name  the  buyer  in  the  de- 
partment likely  to  be  interested  in  one's  goods.  When  that 
buyer  is  not  known  by  name,  perhaps  the  opening  paragraph  of 
a  letter  addressed  to  the  house  may  beg  the  special  attention  of 
the  buyer  in  such  and  such  a  department. 

The  great  things  to  be  borne  in  mind  in  foreign,  as  perhaps 
in  any  letter  writing  are:  accuracy,  clearness,  businesslike  na- 
ture, conciseness  without  loss  in  comprehensiveness,  and  cour- 
tesy. Inaccuracy  in  foreign  correspondence  is  certainly  the  un- 
pardonable sin.  Carelessness  and  indifference  will  react  dis- 
astrously upon  the  man  guilty  of  them.  The  expressions  of  a 
letter  must  be  clear  and  all  possibility  of  double  or  doubtful 
meaning  must  be  avoided.  Undoubtedly  the  use  of  short  sen- 
tences contributes  to  clearness. 

The  dividing  of  the  letter  into  many  paragraphs  is  desirable 
practice  in  foreign  as  in  domestic  letter  writing.  The  intro- 
duction of  headings  in  capital  letters,  or  the  use  of  catch  words 
in  the  margin  at  the  left,  usually  assists  in  directing  especial 
attention  to  paragraphs  which  it  is  desired  to  emphasize. 

Care  must  be  taken  to  develop  one's  argument  consecutively, 
to  group  together  all  paragraphs  containing  information  relat- 
ing to  the  same  subject.  The  use  of  the  postscript,  which  was 
once  thought  to  be  bad  form,  is  sometimes  a  highly  desirable 
method  of  lending  special  emphasis  to  some  desired  point. 

The  old  newspaper  rule  that  the  first  sentence  should  be  such 
as  to  attract  immediate  attention  is  a  good  one  to  adopt  in  any 
correspondence.  Following  this  the  argument  of  the  letter 
should  be  carefully  and  adroitly  developed.  But,  after  all,  the 
main  essential  in  a  foreign  letter  must  always  be  the  simple, 
clear  and  full  story  of  what  you  have  to  say.  Once  more  it 
should  be  here  emphasized  that  blow,  brag  and  exaggeration 
must  be  avoided  at  any  cost.  Let  us  have  no  more  talk  of  "our 
factory  is  the  biggest  in  the  world."  If  we  say  steel,  let  us 
mean  steel — not  sheet  iron. 

Copies  of  Letters. — It  is  the  custom  in  carrying  on  corre- 
spondence with  established  customers  abroad  that  copies  of  un- 
usually important  letters  be  forwarded  by  succeeding  mails  or 
by  another  steamer  than  that  which  carries  the  originals.  This 
is  to  guard  against  risk  of  loss  in  transit.     It  is  followed  gen- 


FOREIGN  TRADE  CORRESPONDENCE  131 

erally  when  unusual  risks  attend  shipping,  as  in  times  of  Avar, 
but  except  under  such  conditions  it  has  not  of  late  years  been 
regarded  as  necessary  to  submit  copies  of  ordinary  letters.  The 
practice  should  never  be  carried  too  far.  For  example,  no  copies 
ought  to  be  sent  of  circular  or  general  sales  letters. 

Prepayment  of  Replies. — It  is  often  enough  the  desire  of  the 
exporter  to  secure  a  reply  from  his  foreign  correspondents  and 
usually  it  is  rather  difficult  securing  supplies  of  foreign  postage 
stamps  to  enclose  with  letters  to  which  replies  would  be  purely 
a  matter  of  courtesy  and  not  absolutely  required.  Several  years 
ago  the  International  Postal  Union  authorized  the  use  of  reply 
coupons  which  can  be  purchased  at  any  post  office  and  are  recog- 
nized by  offices  in  most  of  the  principal  countries  of  the  world. 
These  coupons  cost  6  cents  each  and  are  exchangeable  in  coun- 
tries where  they  are  recognized  for  postage  stamps  equivalent 
to  5  cents  in  value,  thus  enabling  us  to  prepay  replies  from  our 
correspondents  abroad,  no  matter  what  stamps  they  use.  The 
use  of  these  reply  covipons  is  to  be  recommended,  but  that  use 
should  be  made  with  discretion.  The  effect  is  obviously  bad 
when  one's  foreign  correspondents  are  urged  to  make  a  reply  to 
a  communication  which  is  of  no  special  interest  to  them  and 
when  an  apparent  effort  is  made  to  force  such  a  reply  through 
enclosing  a  stamp  or  a  reply  coupon  for  that  purpose.  Almost 
any  one's  feeling  is  likely  to  be  that  he  may  be  trusted  to  an- 
swer anything  of  interest  to  him,  but  that  he  objects  to  having 
any  obligation  forced  upon  him  and  holds  himself  entirely  at 
liberty  to  disregard  the  prepayment  of  reply  which  has  been  sent 
to  him.  On  the  other  hand,  when  a  favor  is  asked  of  a  corre- 
spondent, then  the  prepayment  of  a  reply  may  be  put  in  a  deli- 
cate and  courteous  fashion  that  can  give  no  offense. 

SPECIAL  AND  INDIVIDUAL  LETTERS 

A  manufacturer's  foreign  correspondence  is  certain  to  be 
heavy — if  he  pushes  as  aggressively  as  he  should  to  establish  his 
goods  in  export  markets.  That  correspondence  will  include 
both  special  and  circular  letters,  and  each  kind  may  be  either 
individualized  or  "form."  Needless  to  say,  the  more  indi- 
vidualizing that  can  be  put  into  all,  the  better. 

Two  Ways  of  Introduction  by  Letter.— In  opening  corre- 


132  PRACTICAL  EXPORTING 

spondence  with  a  given  foreign  market  either  of  two  methods 
may  be  chosen:  a  number  of  identical  (circular)  letters  may  be 
addressed  to  several  or  all  the  good  houses  in  that  market  of 
whom  the  manufacturer  may  hear,  offering  to  all  the  same  terms 
and  the  same  goods ;  or  one,  only,  special  letter  may  be  written  to 
that  one  house  in  the  market  in  question  which  information  ob- 
tained indicates  as  that  house  apparently  most  desirable  as  an 
exclusive  (or  the  chief)  connection  there  for  the  manufacturer's 
goods.  Both  methods  have  their  advocates.  Let  us  now  con- 
sider the  latter  plan,  that  of  addressing  one  house  only  in  a 
market. 

To  study  the  personnel  of  a  market,  determining  the  relative 
importance  there  of  the  several  importers  and  merchants,  asses- 
sing the  probable  or  apparent  advantage  of  each  to  the  manu- 
facturer's goods  and  policies,  is  obviously  good  policy  in  any 
event.  Picking  out  the  one  house  which  seems  most  to  be  de- 
sired, introducing  oneself  only  to  that  house  in  the  effort  to 
establish  one's  line  in  his  market,  may  very  likely  postpone  for 
a  time  the  introduction  of  the  goods.  The  house  addressed  may 
not  be  interested ;  it  then  becomes  necessary  to  approach  a  second 
choice  on  the  list  in  the  same  market,  perhaps  later  a  third  and  a 
fourth  choice.  When,  however,  the  line  is  finally  placed,  the 
manufacturer  knows  that  he  has  placed  it  in  the  very  best 
hands  available  to  him.  Though  perhaps  slower  in  results,  this 
method  finds  supporters  among  those  who  look  beyond  imme- 
diate orders  to  ultimate  development  of  trade.  Circular  letters 
to  all  possible  prospects  in  a  market  may  result  in  prompter 
manifestation  of  interest  on  the  part  of  some  one,  if  not  one  of 
those  most  desired. 

Selecting  only  one  target  for  correspondence  in  a  market  will 
still  give  the  Export  Department  plenty  of  work,  for  there  are 
so  many  markets.  The  effort  to  get  established  in  the  best  avail- 
able way  should  be  going  on  at  the  same  time  in  Peru  and  in 
New  Zealand,  in  Egypt  and  in  Japan. 

Initial  Letters. — How  shall  we  introduce  ourselves  when  we 
approach  a  foreign  buyer  for  the  first  time,  if  we  are  writing 
individual  letters,  one  at  a  time,  to  prospects  who  seem  peculiarly 
desirable?  The  best  of  all  introductions  is  certainly  that  from 
some  of  our  friends  or  acquaintances  who  are  already  doing 


FOREIGN  TRADE  CORRESPONDENCE  133 

business,  better  yet,  have  for  a  long  time  done  business,  with  the 
prospect.  If  we  can  write  specifically  that  Messrs.  Smith  & 
Jones,  of  Chicago,  with  whom  we  are  on  peculiarly  intimate 
terms,  have  urged  us  to  offer  our  goods,  or  their  exclusive  con- 
trol, to  Robinson  &  Browne,  their  own  especially  valued  cus- 
tomers in  Melbourne — that,  in  consequence,  we  have  made  a 
careful  selection  from  our  line  and  pared  down  our  prices  to  the 
last  cent,  etc.,  etc. — then  we  are  sure  to  receive  consideration,  at 
least.  But  never  ought  we  say  in  an  airy,  indefinite  way,  that 
we  owe  the  address  of  Robinson  &  Browne,  of  Melbourne,  "to 
friends  of  ours."  It  is  actual  acquaintances  and  business  rela- 
tions of  specific  friends  on  which  we  must,  in  such  cases, 
depend. 

If  we  cannot  gain  such  an  introduction  (though  one  should 
not  be  difficult  through  inquiry  and  cooperation)  then  we  can  de- 
clare in  our  initial  letter  that  we  have  for  some  time  been  mak- 
ing a  careful  study  of  the  market  where  our  prospect  is  estab- 
lished, have  weighed  the  relative  importance,  facilities,  advan- 
tages, etc.,  of  the  several  leading  concerns  there  on  the  basis  of 
information  we  have  gathered,  and  venture  to  address  the  par- 
ticular prospect  as  the  one  house  whom  we  would  like  most  of 
all  to  count  as  our  customer  and  ally  in  introducing  our  new  line 
which  has  notable  qualities,  advantages,  price."?,  etc.  But  let  us 
not  stultify  ourselves  by  using  such  phraseology  in  a  number  of 
identical  letters  to  the  same  market  at  the  same  time. 

Support  of  Foreign  Agents. — Not  least  important  among  the 
letters  which  must  engage  the  attention  of  the  export  manager 
are  those  which  keep  him  in  constant  and  intimate  relation  with 
agencies  he  has  established  abroad.  It  is  altogether  too  com- 
mon a  practice  for  a  manufacturer  to  intimate,  though  he  may 
not  say  it  in  so  many  words,  "Now  we  have  given  you  the 
agency  for  the  finest  line  of  goods  on  earth,  go  ahead  and  send 
us  orders."  The  exporter's  duty  does  not  stop  here.  It  is 
distinctly  his  part  to  keep  his  agents  primed  with  interest,  en- 
thusiasm and  ambition.  The  tone  and  temper  of  the  letters 
which  he  receives  from  the  home  office  are  all  important.  When 
he  sends  in  orders,  congratulate  him ;  when  he  sends  none,  try  to 
find  out  why — and  devise  means  of  helping  him  remedy  the  situ- 
ation.    A.   E.   Ashburner,  Foreign  Manager,  American  Multi- 


134  PRACTICAL  EXPORTING 

graph  Sales  Company,  advises  monthly  letters  or  bulletins  of  in- 
formation and  suggestion  and  indicates  the  following  as  suit- 
able subjects  for  such  letters:  Letters  of  general  instructions; 
letters  of  sales  instructions ;  letters  of  mechanical  instructions ; 
letters  giving  details  of  new  goods  placed  on  the  market  with 
new  sales  arguments  regarding  them;  letters  taking  old  lines  off 
the  market ;  letters  reducing  or  increasing  prices. 

A  general  correspondence  campaign  in  a  local  territory  is 
often  carried  on  by  exporters  direct  from  the  factory  to  assist 
local  agents  in  developing  their  territories.  It  often  happens 
abroad  as  well  as  at  home  that  a  letter  bearing  a  foreign  post- 
age stamp,  coming  direct  from  headquarters,  makes  a  deeper 
impression  than  a  mere  local  circular.  When  this  is  done  the 
prearranged  cooperation  of  the  agent  is  essential.  Further- 
more, his  ideas  as  to  the  character  and  nature  of  the  letters  from 
the  home  office  should  be  sought.  The  manufacturer  himself 
may  not  have  nearly  so  thorough  an  acquaintance  with  the  sym- 
pathies, prejudices,  idiosyncrasies  of  the  foreign  people  to  be 
addressed,  and  valuable  hints  in  these  regards  may  be  received 
from  the  agent. 

FOREIGN  INQUIRIES  AND  REPLIES  TO  THEM 

Every  inquiry  received  from  a  foreign  country  regarding 
one's  goods  ought  to  receive  some  sort  of  attention.  Not  one 
should  be  consigned  read  or  unread  to  the  waste  paper  basket. 
The  fact  that  a  good  many  letters  from  Latin  America  are  re- 
ceived on  plain  paper  bearing  no  printed  indication  of  the 
writer's  occupation  must  not  be  assumed  to  indicate  that  the 
correspondents  are  not  potential  customers.  It  is  not  very  long 
ago  that  one  such  inquiry,  which  it  turned  out  had  come  from 
the  proprietor  of  an  extensive  hacienda  (ranch)  in  a  Latin 
American  country,  resulted  in  a  total  order  amounting  to  over 
$10,000  for  farm  supplies  of  different  sorts. 

The  great  desideratum  in  answering  foreign  letters  is  the 
ability  to  reply  without  requiring  fresh  questions,  to  tell  one's 
story  in  full  and  beyond  the  possibility  of  misunderstanding, 
to  anticipate  objections  and  criticisms,  in  a  word,  to  sell  one's 
goods.     A  certain  ability  in  psychology  should  be  cultivated. 

Analysis  of  Foreign  Letters. — Too  many  of  us,  perhaps,  are 


FOREIGN  TRADE  CORRESPONDENCE  135 

apt  to  carry  our  national  obsession  of  "hustle"  into  the  reading 
of  our  correspondence.  We  glance  hastily  over  a  few  phrases, 
or  a  paragraph  or  two ;  we  do  not  digest  the  letters  we  receive. 
A  good  deal  is  often  to  be  learned  of  what  is  at  the  back  of  our 
correspondents'  minds  by  a  study  of  their  letters,  of  their  char- 
acter and  idiosyncrasies,  when  we  have  never  met  them  in  per- 
son ;  a  good  deal  of  the  nature  and  even  probable  extent  of  their 
business  from  an  analysis  of  some  letter-heads. 

The  quite  obvious  features  of  a  letter-head  are  the  variety 
and  kinds  of  goods  handled  and  the  sources  of  possible  informa- 
tion about  the  correspondent's  business,  his  reliability  and  re- 
sponsibility, as  betrayed  by  the  names  which  may  be  printed  of 
suppliers  of  the  goods  he  handles.  The  date  of  the  establish- 
ment of  his  business  may  be  notable,  even  the  individual  names 
of  the  partners  in  a  firm  or  officers  of  a  company.  There  may 
be  branch  establishments  named ;  cable  address  and  codes  used ; 
indications  as  to  whether  manufacturer,  importer  or  retail  shop- 
keeper— all  may  be  interesting  if  not  important.  Sometimes 
there  is  more  or  different  information  imprinted  on  the  en- 
velope in  which  a  communication  is  received — one  reason  for  at- 
taching all  foreign  envelopes  to  their  enclosures  as  they  are 
opened. 

Information  and  clues  from  letters,  letter-heads  and  envelopes 
should  always  be  sought  and  duly  recorded;  but  they  should 
be  recognized  as  only  suggestive,  to  be  proven  or  disproven  by 
investigation  or  the  course  of  events.  Printing  is  not  expensive 
and  the  humblest  or  most  undeserving  may  compose  the  most 
grandiose  and  eloquent  "copy." 

Kinds  of  Inquiries. — A  certain  proportion  of  foreign  inquiries 
received  by  any  manufacturer  is  sure  to  be  made  up  of  letters 
from  commission  agents  who  do  not  want  to  buy  goods  them- 
selves but  wish  to  sell  them  for  the  account  of  the  American 
manufacturer.  The  function  of  such  agents  will  be  explained  in 
a  later  chapter.  No  matter  how  disposed  toward  them  the 
manufacturer  may  feel,  no  matter  whether  obviously  some  in- 
quiries of  this  sort  come  from  individuals  with  whom  it  may 
seem  for  the  time  being,  at  any  rate,  undesirable  to  establish 
relations,  yet  in  every  instance  a  reply  of  some  sort  should  be 
sent.     It  is  just  as  well,  usually,  for  the  manufacturer  to  secure 


136  PRACTICAL  EXPORTING 

the  good  will  of  every  correspondent  who  has  shown  the  slightest 
interest  in  his  goods.  No  harm,  certainly,  can  result  from  an 
advertisement  of  one's  goods  and  their  peculiar  qualities  even  if 
it  is  not  desired  to  meet  the  special  terms  proposed  by  a  corre- 
spondent. 

Moreover,  it  is  easy  to  make  mistakes  in  appraising  the  pos- 
sible value  of  such  inquiries.  A  number  of  years  ago  when  the 
author  was  about  to  start  on  a  foreign  trip  he  was  asked  to  find 
out  who  and  what  might  be  a  certain  person  in  a  market  that 
was  to  be  visited,  since  the  person  in  question  had  been  address- 
ing hundreds  of  letters,  apparently  to  every  American  manu- 
facturer he  could  hear  of,  soliciting  catalogues,  quotations  and 
agencies.  So  frequent  had  been  these  applications  that  the  in- 
dividual in  question  was  regarded  as  very  much  of  a  joke.  Arriv- 
ing at  the  market  in  question  it  was  quickly  discovered  that  the 
writer  of  these  innumerable  applications  for  agency  was  a  youth, 
only  a  year  or  two  out  of  school,  employed  by  a  local  business 
house  at  the  munificent  wage  of  $13  a  month. 

His  applications  to  American  manufacturers  seemed  at  first 
blush  to  be  the  height  of  the  absurd.  But  it  developed  on  in- 
vestigation that  he  had  recentlj^  inherited  a  small  sum  of  money, 
perhaps  $2,500,  and  was  seriously  attempting  to  set  himself  up 
in  business.  He  had  not  paid  out  money  for  stationery  and 
printing,  and  spent  about  $50  in  postage  stamps,  merely  for  the 
fun  of  the  thing.  It  ultimately  turned  out  that  he  actually  in- 
vested a  large  part  of  his  inheritance  in  small  assortments  of 
four  or  five  different  American  lines,  started  in  business  and  at 
last  accounts  was  still  continuing  to  do  business.  The  advice  to 
neglect  no  inquiry  received  seems,  therefore,  to  be  well  founded. 
None  the  less,  a  certain  weeding  out  process  may  be  carried  on. 
Some  of  the  goats  can  be  separated  from  the  sheep.  One  rule 
cannot  be  made  to  apply  to  all  inquiries  received. 

Form  Letters. — The  use  of  the  form  letter  immensely  facilities 
all  correspondence,  foreign  included,  in  almost  every  imaginable 
business.  Replies  to  inquiries  and  general  sales  letters  nearly 
all  resolve  themselves  down  to  a  few  concrete  clauses.  A  suit- 
able number  of  paragraphs  may  be  written  dealing  with  the 
various  conditions  which  it  is  necessary  usually  to  treat.  These 
paragraphs  may  be  numbered  for  reference  in  dictating  replies 


FOREIGN  TRADE  CORRESPONDENCE  137 

or  other  letters  and,  like  ever}^  other  phase  of  correspondence, 
may  be  translated  into  foreign  languages.  Each  paragrapli 
must^  however,  treat  its  special  phase  fully  and  in  the  simplest 
terms.  Care  must  be  taken  in  the  arrangement  of  these  para- 
graphs so  that  the  argument  of  the  whole  letter  may  be  logically 
and  effectively  developed.  These  are  commonplaces  of  every- 
day business. 

In  foreign  correspondence,  this  is  most  carefully  to  be  noted : 
especial  attention  must  be  given  to  avoid,  if  possible,  the  very 
suggestion  of  a  "form  letter."  Almost  ever}-  one,  and  cer- 
tainly every  foreigner,  prefers  personal  attention.  As  the 
form  letter  has  not  been  developed  or  utilized  in  other  countries 
as  it  has  in  this,  the  very  suspicion  that  the  letter  is  not  especially 
dictated  with  personal  reference  to  him  is  apt  to  antagonize  the 
foreign  prospect.  This  effect  may  be  usually  avoided  by  care- 
ful composition  of  the  several  different  form  paragraphs.  It  is 
also  quite  possible  in  dictation  to  add  to  each  form  paragraph  a 
sentence,  or  if  necessary  several  of  them,  in  tone  with  the  rest 
of  the  paragraphs,  aimed  personally  at  the  special  correspondent 
in  question.  If  no  more,  there  can  at  least  be  the  special  intro- 
duction to  the  whole  letter  of  a  strictl3'  individual  character  and 
a  special  closing  paragraph  of  similar  nature.  Very  few  form 
letters  have  ever  been  devised  in  the  use  of  which  it  will  ansAver 
requirements  simply  to  dictate  "form  17,  paragraphs  1,  6,  8 
and  9." 

Selling-  by  Letter. — "The  first  essential  of  our  export  sales 
letter  is  that  it  enables  the  prospective  customer  to  order  with- 
out further  correspondence.  This  means  that  prices,  discounts, 
f.o.b.  points,  terms,  extras  if  any,  be  clearly  stated.  The  second 
essential  is  that  it  create  a  desire  to  become  a  customer  of  the 
seller,  not  merely  to  attract  his  attention  to  the  goods  offered. 
This  combination  of  essentials  requires  a  sales  letter  which  by 
its  businesslike  presentation  of  the  offered  products  inspires 
confidence,  not  only  a  belief  in  their  value,  but  of  equal  impor- 
tance, inspires  confidence  in  their  maker."  (Walter  F.  Wy- 
man.) 

The  confidence  in  the  exporter  that  may  be  inspired  by  letters 
primarily  intended  to  develop  orders  deserves  special  emphasis. 
It  ought  not  to  be  our  effort  merely  to  get  one  order — our  aim 


138  PRACTICAL  EXPORTING 

should  be  to  lay  the  foundation  and  establish  a  sound  basis  for 
the  building  up  of  permanent  business  relations.  To  reply  to  an 
inquiry  about  one's  goods  with  the  naive  and  entirely  gratuitous 
remark  "We  are  new  in  the  export  trade,  have  had  no  expe- 
rience yet,"  is  to  hold  out  anything  but  a  tempting  bait.  Get- 
ting the  first  order  is  the  indispensable  and  vital  thing.  What 
is  there  we  can  say  that  will  help  in  securing  this  result? 

Important  to  Differentiate  the  Goods. — In  the  author's  opin- 
ion the  one  most  important  of  all  features  of  an  export  sales  let- 
ter is  emphasis  upon  the  individuality  of  the  goods  offered. 
How  are  they  different  from  or  better  than  other  similar  goods? 
Some  manufacturers  may  actually  have  absolute  novelties  to 
offer.  ]\Iany  other  manufacturers  make  goods  more  or  less  sim- 
ilar to  goods  of  the  same  class  made  by  other  manufacturers. 
But  few  cases  there  are  where  one  maker 's  products  do  not  differ 
more  or  less  distinctly  in  some  respects  from  another  maker's. 
Such  differences  may  be  intrinsic  in  the  goods  themselves,  or 
they  may  consist  in  variations  in  processes  of  manufacture  which 
ensure  better  appearance,  service  or  effectiveness.  Again,  sales 
arguments  may  depend  on  deliveries,  or  one  factory  may  be  in  a 
peculiarly  favorable  position  to  accept  larger  contracts  than 
another,  or,  vice  versa,  may  be  willing  to  accept  small  orders 
when  competitors  demand  large  quantities  as  a  minimum. 

Talking  on  Paper. — The  great  thing  in  attempting  to  sell 
goods  by  correspondence,  especially  in  correspondence  with  large 
importers  abroad,  is  to  be  able  to  transfer  to  paper  effectively  at 
least  the  strongest  and  most  striking  talking  points  and  selling 
arguments  that  one  uses  when  he  is  trying  to  sell  his  goods  per- 
sonally face  to  face  with  his  customers.  It  seems  rather  curious 
that  this  impresses  many  manufacturers  as  a  difficult  if  not  an 
impossible  task.  Many  a  man  throws  up  his  hands  and  says 
he  does  not  know  how  he  sells  his  goods,  his  goods  are  just  like 
every  one  else's,  etc.  Yet,- if  he  is  cross-examined  and  asked 
what  he  says  to  his  customers  in  Ohio,  a  light-  will  gradually  be- 
gin to  dawn  in  his  mind. 

His  first  step  ought  to  be  to  sit  down  with  a  stenographer  and 
talk  out  his  story  at  length  and  in  fullest  detail,  conversation- 
ally, intimately,  just  as  though  he  were  talking  to  a  business 
prosp^et.     Then,  when  he  gets  his  selling  talk  in  black  and 


FOREIGN  TRADE  CORRESPONDENCE  139 

white  before  him,  he  can  proceed  to  weed  out  and  "doctor"  it 
as  may  seem  advisable — but  he  must  be  careful  not  to  emascu- 
late it.     He  must  not  be  afraid  to  really  say  things  in  print. 

Sales  Arguments. — While  it  is  entirely  out  of  the  question 
to  attempt  to  suggest  selling  arguments  for  either  regular  or 
special  lines  of  goods,  yet  it  may  be  hinted  that  quality  goods 
can  be  just  as  effectively  presented  and  as  easily  sold  as  cheap 
goods,  if  due  emphasis  is  placed  on  increased  durability  of  a 
third  or  a  half,  on  peculiarly  excellent  finish,  on  an  appeal  to 
discriminating  buyers  and  not  the  rabble,  on  advertising  possi- 
bilities to  consumers  (especially  in  regard  to  peculiar  features) 
with  consequent  ease  in  selling  and  profit-making.  Goods  com- 
manding the  highest  possible  prices  known  may  boast  of  that 
fact.  If  goods  are  offered  at  lower  prices  than  competitor's, 
suspicion  must  be  disarmed  and  assurances  given  that  they  will 
answer  every  practical  purpose,  while  extra  profits  may  be 
pointed  out,  or  advantages  in  utilizing  such  goods  in  special 
sales  at  cut  prices.  Goods  which  show  no  variation  in  price 
from  competing  goods  require  specialization  in  some  fashion  and 
to  the  greatest  possible  degree. 

Even  Staples  May  be  Individualized. — Any  kind  of  goods  can 
be  differentiated  from  competitors  with  a  little  ingenuity — even 
staple  goods.  There  are  even  certain  brands  of  kerosene  oil  that 
have  attained  a  world  wide  demand  and  command  a  little  higher 
price  than  other  brands — perhaps  because  they  are  worth  it,  but 
chiefly  because  these  special  brands,  having  qualities  that  have 
become  recognized,  have  gradually  made  themselves  known 
everywhere,  command  higher  prices  because  known  to  be  de- 
pendable. If  nothing  else  can  be  done  with  a  strictly  staple 
article,  at  least  an  attractive  trademark  can  be  adopted,  or  it 
can  be  packed  in  attractive  packages,  and  the  effort  made  to 
build  up  trade  and  fame  on  such  a  basis.  Even  in  staples, 
merchants  and  agents  will  be  found  in  every  part  of  the  world 
who  can  be  induced  to  take  up  such  a  new  brand,  if  promised 
the  enthusiastic  cooperation  of  the  makers,  for  the  sake  of  having 
something  of  their  own  to  offer,  something  different  from  their 
competitor's  goods. 

Composition  of  Sales  Letters. — In  an  article  published  in  the 
American  Exporter  some  time  ago.  A,  E,  Ashburner  outlined 


140  PRACTICAL  EXPORTING 

his  ideas  as  to  a  general  plan  for  the  construction  of  foreign 
sales  letters  from  which  the  following  is  condensed :  The  pur- 
pose of  an  inquiry  is  to  learn  something  about  your  goods.  The 
first  few  paragraphs  on  display  in  your  reply  form  the  show 
window  through  which  your  foreign  customer  sees  your  goods. 
After  this  display  should  come  a  few  paragraphs  as  to  the  appli- 
cation of  your  goods  to  the  foreign  buyer's  particular  needs. 
This  should  be  followed  by  the  efficiency  of  your  product,  the 
results  that  are  actually  being  obtained  from  its  use.  If  Ameri- 
can users  are  mentioned  they  should  be  concerns  of  international 
reputation.  If  you  have  ever  sold  your  product  abroad  in  a 
coiuitry  where  similar  conditions  exist  as  in  the  one  from  which 
your  inquiry  came,  tell  your  correspondent  where  those  goods 
were  sold  and  what  kind  of  a  concern  is  using  them.  Economies 
to  be  obtained  are  always  interesting  reading  matter.  Prices 
must  be  handled  with  care.  They  should  always  come  last. 
Many  a  time  when  the  manufacturer  has  quoted  prices  first  the 
rest  of  the  letter  has  not  been  read,  because  those  prices  ap- 
peared high  and  the  prospect  does  not  wait  to  read  anything 
more.     Tell  him  your  story  first. 

The  suggestion  to  name  established  customers  is  an  especially 
good  one,  when  they  are  foreign  customers.  Mention  of  Ameri- 
can clients,  even  the  biggest  concerns,  is  comparatively  value- 
less. It  is  always  a  good  plan  to  let  a  foreign  prospect  know 
that  one's  goods  have  already  been  sold  in  other  countries  than 
here  at  home  in  the  United  States.  The  prospect  in  Australia, 
if  he  understands  that  the  goods  he  has  under  consideration  have 
already  been  introduced  in  South  Africa,  especially  if  b}^  a 
prominent  house  there,  is  almost  sure  to  argue  to  himself :  if  the 
goods  can  be  sold  there,  it's  worth  while  looking  into  them  for 
Australia. 

Obviouslj^,  some  care  must  be  used  in  mentioning  the  names 
of  foreign  customers.  As  a  rule,  foreigners  object  to  this  prac- 
tice unless  their  permission  has  first  been  obtained.  Then,  too, 
a  certain  risk  is  involved  in  mentioning  names  unless  the  manu- 
facturer has  been  positively  assured  of  the  continued  satisfac- 
tion of  the  customer  with  the  line.  The  nearer  an  actual  user 
of  goods  may  be  located  to  the  territory  of  the  prospect  the 
better,  as  a  rule,  yet  when  local  jealousy  or  possible  infringe- 


FOREIGN  TRADE  CORRESPONDENCE  141 

ment  of  territories  regarded  as  exclusive  may  be  involved  such 
references  are  obviously  not  desirable. 

Guaranty  of  Goods. — It  is  almost  the  universal  practice 
among  manufacturers  to  guarantee  their  goods,  at  least  so  far 
as  "faults  in  manufacture"  are  concerned.  This  seems  usually 
to  be  done  in  the  case  of  efforts  to  sell  goods  abroad  as  well  as  at 
home.  It  may  be  pointed  out,  however,  that  such  a  guaranty 
on  the  part  of  the  manufacturer  is  practically  worthless  when 
goods  have  been  shipped  oversea.  The  delays  and  the  expense 
involved  in  returning  goods  make  such  a  procedure  impracti- 
cable, or  at  least  undesirable,  while  there  are  probably  few  manu- 
facturers who  would  be  willing  to  make  a  cash  allowance  to  a 
foreign  customer  solely  on  the  basis  of  his  simple,  unsubstanti- 
ated assertion  and  claim.  "While  the  guaranty  really  does  not 
mean  anything,  therefore,  but  may  be  included  if  so  desired, 
it  is  bound  to  have  this  objection:  some  of  our  customers  abroad 
will  be  almost  sure  to  expect  that  in  case  of  dissatisfaction  all 
they  have  to  do  is  to  express  it  and  receive  new  goods  or  an 
allowance. 

References  on  Both  Sides. — -In  correspondence  with  new 
prospects  the  exporter  will,  of  course,  politely  inquire  for  ref- 
erences, preferably  to  concerns  in  the  United  States  with  whom 
business  has  already  been  transacted,  as  well  as  to  bankers.  A 
later  chapter  will  revert  to  this  subject.  At  the  same  time  the 
exporter  must  remember  that  he  is  as  unknown  to  the  prospect 
as  the  latter  is  to  him.  The  prospect,  if  a  serious  and  expe- 
rienced importing  house,  will  hardly  have  avoided  some  dis- 
couraging relations  with  new  suppliers,  many  of  them  perhaps 
American  suppliers.  In  consequence,  it  Mnll  not  be  surprising 
if  he  wishes  to  know  something  about  the  importance  and  the 
reliability  of  the  strange  manufacturer  who  now  offers  him  goods 
in  some  respects  attractive.  The  manufacturer  will  do  well  to 
take  this  aspect  of  the  business  into  consideration.  If  he  has  al- 
ready established  business  in  the  prospect's  territory,  references, 
with  proper  restrictions  as  has  already  been  suggested,  may  be 
offered  to  such  connections. 

In  general  it  is  not  worth  while  naming  specific  references  in 
the  United  States.  This  applies  specially  to  references  to  our 
American  commercial  agencies.     It  is  true  that  the  principal 


142  PRACTICAL  EXPORTING 

agencies  of  this  sort  have  established  certain  foreign  connections. 
None  the  less,  they  are  not  widely  known  abroad  and  do  not  en- 
joy anything  like  the  universal  patronage  which  they  enjoy  in 
the  United  States.  The  mention  of  their  names  does  not,  there- 
fore, carry  the  same  weight  with  people  not  thoroughly  familiar 
with  their  operations.  With  others,  who  do  know  something 
about  them,  it  is  not  necessary  to  mention  their  names,  for  the 
prospects  will  already  understand  that  such  information  is  avail- 
able— if  tliey  wish  to  pay  for  it.  Those  who  do  not  thoroughly 
understand  the  operations  of  such  agencies  will  be  unpleasantly 
surprised  and  very  likely  repelled  when  they  make  application 
for  information,  as  invited  to  do  by  the  manufacturer's  corre- 
spondence, to  learn  that  a  fee  will  be  demanded  before  the  in- 
formation is  supplied.  On  these  several  accounts  references  of 
this  character  are  not  to  be  advised. 

Reference  About  Oneself. — The  usual  English  style  of  dealing 
with  this  matter  may  be  recommended  in  all  foreign  corre- 
spondence. An  Englishman  will  be  quite  sure  to  write  some- 
thing like  this:  "As  to  ourselves  we  may  say  that  we  have  been 
in  business  since  1812  and  believe  that  we  can  flatter  ourselves 
on  having  maintained  during  all  of  these  years  a  uniformly 
satisfactory  reputation,  both  as  to  our  business  methods  and  the 
quality  of  our  products,  with  our  many  customers  all  over  the 
world.  We  would  suggest  that  in  order  to  satisfy  yourself  in 
these  respects  you  ask  your  local  bankers  to  make  inquiries  about 
us  through  the  usual  channels."  This  means  that  the  pros- 
pect's local  bank  will,  at  his  request,  address  its  banking  corre- 
spondents in  the  United  States  and  the  latter  will  in  due  course 
report  back  briefly  as  to  the  reputation  and  financial  abilities  of 
the  American  concern,  without  cost  to  the  enquirer. 

This  is  a  great  deal  better  than  to  give  specific  references  to 
American  bankers,  even  the  largest  and  best  known  of  New  York 
international  bankers,  if  the  exporter  chances  to  be  known  to 
any  of  them.  These  bankers  usually  object  to  having  their 
names  given  as  references  even  by  old  and  rich  concerns  with 
whom  th oy  have  large  transactions.  When  the  names  of  any 
such  bankers  are  mentioned  at  all  it  should  not  be  by  way 
of  reference,  but  merely  "We  may  say  that  we  are  known  to 
Messrs.  So  and  So,  prominent  bankers  of  New  York,  who  are 


FOREIGN  TRADE  CORRESPONDENCE  143 

doubtless  also  known  in  your  city."  (Certainly  no  references 
to  local  interior  banks,  whether  the  First  National  or  the  Sec- 
ond National,  or  any  other  country  bank,  carry  the  slightest 
weight  in  foreign  correspondence.) 

CIRCULAR  LETTERS  AND  FOLLOW-UP  SYSTEMS 

There  may  be  little  if  any  ditt'ereuce  between  the  usual  form 
letter  employed  by  a  manufacturer  in  replying  to  inquiries  and 
a  circular  letter  to  be  distributed  more  or  less  generously  among 
trade  possibilities  or  prospects  in  foreign  markets.  All  of  the 
remarks  just  offered  apply  also  to  the  circular  letter.  It  may, 
however,  be  utilized  with  a  number  of  different  purposes  in  view. 
For  example,  for  general  publicity,  or  as  an  introduction  to 
the  general  trade  of  a  market,  that  is,  the  smaller  dealers  or 
even  in  some  cases  the  ultimate  consumers,  who  may  be  solicited, 
alw'ays  at  suitably  graded  prices,  for  the  sake  of  getting  a  cer- 
tain line  of  goods  on  the  market,  making  them  recognized, 
known  and  popular,  and  thus  supporting  or  ultimately  leading 
up  to  the  establishment  of  a  general  agency  or  a  wholesale  dis- 
tributor. Each  manufacturer's  policj^  in  such  regards  must, 
of  course,  be  dictated  by  his  individual  judgment. 

Mailing  Lists  Again, — The  basis  for  any  general  circularizing 
campaign  must  be  the  mailing  list.  Ways  of  compiling  such  a 
list  have  already  been  suggested.  In  addition  it  may  be  pointed 
out  that  for  an  extended  campaign  in  a  given  city  or  locality 
the  local  telephone  directory  may  be  employed.  Little  in- 
genuity is  required  in  securing  such  directories  even  when  the 
manufacturer  has  no  established  agency  in  the  town  in  ques- 
tion. They  are  preferable  to  other  directories  since  they  may  be 
regarded  as  a  kind  of  "preferred  lists."  Some  of  them  will, 
however,  be  found  useless  because  an  indication  is  not  always 
given  of  the  business  or  occupation  of  the  firms  and  individuals 
mentioned.  If  one  has  a  local  agent  he  can  check  names  before 
forwarding  to  the  United  States,  but  without  that  guide  such 
directories  are  quite  useless  for  the  ordinary'  manufacturer. 

Testing  Circulars. — The  plan  may  sometimes  be  a  good  one 
to  test  out  a  circular  letter  in  a  limited  experiment.  The  effect 
of  circular  letters,  as  of  any  other  form  of  advertising,  is  not 
always  to  be  pre-determined.     What  a  writer  may  regard  as  a 


144  PRACTICAL  EXPORTING 

clever  production  may  fall  flat  so  far  as  actual  results  obtained 
are  concerned,  while  an  effort  of  quite  another  character  may 
bring  surprisingly  big  results.  Each  new  letter  should,  there- 
fore, be  watched  carefully  and  a  record  of  results  kept.  It  may 
first  be  tried  in  a  near-by  market,  say  Cuba  (in  Spanish)  or  the 
British  West  Indies  (in  English),  and  the  future  use  of  that 
particular  letter  determined  by  the  results  obtained. 

Who's  Who  Abroad. — The  general  circularization  abroad  of 
all  trade,  or  of  the  ultimate  consumer,  is  rare  in  the  practice  of 
American  manufacturers.  It  is  probably  done  exclusively  by 
manufacturers  who  thus  cooperate  with  local  agents  already 
established  and  under  their  direction.  Most  manufacturers  re- 
strict their  efforts  in  circularizing  to  the  larger  firms  with  whom 
they  especially  wish  to  establish  direct  relations.  In  such  cases 
it  follows  that  each  market  to  be  circularized  should  have  as 
thorough  a  study  as  possible.  The  selection  of  names  to  be  ad- 
dressed should  be  restricted  solely  to  those  believed  to  be  in  a 
position  to  do  direct  importing.  In  no  effort  of  this  sort  should 
exclusive  agency  propositions  be  made.  It  cheapens  the  manu- 
facturer and  his  goods  to  throw  his  agency  at  the  head  of  a 
number  of  concerns  with  whom  he  has  not  hitherto  so  much  as 
exchanged  letters.  Moreover,  no  good  business  man  can  be  ex- 
pected to  seek  or  accept  an  agency  until  he  has  actually  seen 
and  experimented  with  the  goods  themselves.  The  effort  of  cir- 
cular letters  should  be  to  get  the  actual  goods  into  the  hands 
of  people  who  may  ultimately  develop  into  good  customers  or 
agents. 

Careless  Circularizing. — Altogether  too  much  carelessness  is 
shown  by  many  manufacturers  in  inaugurating  circular  letter 
campaigns.  The  general  trade  in  a  territory  is  sometimes  cir- 
cularized when  goods  have  already  been  introduced  there,  and 
cases  are  not  unknown  where  circulars  have  been  distributed 
broadcast  offering  the  trade  prices  less  by  20  or  30  per  cent. 
than  retailers  have  been  accustomed  to  pay  for  the  same  goods 
to  local  wholesalers.  This  question  of  prices  is  one  to  which  we 
shall  also  revert  shortly. 

Again,  it  happens  often  enough,  twice  in  the  author's  per- 
sonal experience,  that  a  manufacturer  is  apparently  ignorant 
of  the  fact  that  he  has  established  a  sole  agency  in  a  given  terri- 


FOREIGN  TRADE  CORRESPONDENCE  145 

tory  and  proceeds  to  circularize  that  territory  without  tl]^e 
slightest  consideration  for  the  established  agent  who  is  placing 
regular  orders,  who  may  indeed  have  a  formal  agency  contract 
with  the  manufacturer.  Practices  of  this  sort  do  not  conduce 
to  the  high  reputation  of  American  business  men. 

Facsimile  and  Mimeograph  Letters. — In  principle  all  for- 
eign circular  letters  ought  to  be  individually  typed.  It  has  al- 
ready been  suggested  that  foreigners,  far  more  than  we,  are  apt 
to  insist  on  being  personally  addressed.  To  obtain  the  best 
effects,  therefore,  at  least  the  appearance  of  "form"  or  "fac- 
simile" should  be  avoided.  The  best  way  of  accomplishing  this 
result  is  undoubtedly  through  the  use  of  automatic  typewriters 
which  reproduce  any  desired  number  of  letters  which  are  ab- 
solutely indistinguishable  from  hand  written  letters.  But  these 
machines  are  not  always  or  everywhere  available.  The  trouble 
with  most  of  the  "facsimile"  typewritten  letters  is  the  difficulty 
of  exactly  matching  names  and  addresses  to  the  bod}^  of  the 
letter.  This  difficulty  is  aggravated  when  different  series  of 
addresses  are  used  at  different  times.  IVIost  letters  made  on  the 
mimeograph  or  any  similar  apparatus  are  open  to  the  objection 
that  they  are  all  too  oviously  mereh^  circulars. 

When  a  circular  letter  is  to  be  written  in  foreign  languages 
it  is  often  necessary  to  prepare  two  forms,  one  in  the  singular 
and  the  other  in  the  plural,  to  be  used  respectively  in  address- 
ing individuals  and  firms.  Another  difficulty  arises  in  connec- 
tion with  circular  letters  in  other  languages.  This  is  the  dif^- 
culty  or  the  impossibility  of  insuring  the  accurate  copying  of 
letters  in  strange  tongues  by  the  regular  office  force.  A  mis- 
placed or  omitted  accent  in  a  foreign  word  may  materially 
change  the  significance  of  a  word  or  even  make  it  highly  ridicu- 
lous. For  these  reasons  the  use  of  the  automatic  typewriter  is 
specially  desirable. 

Follow-up  Systems. — The  use  of  "follow-ups"  is  so  common 
nowadays  that  it  surely  cannot  be  necessary  here  to  explain 
what  is  meant.  Innumerable  books  on  business  correspondence 
deal  fully  with  the  principles  involved,  the  most  desirable  sys- 
tems of  ticklers,  etc.  A  warning  may,  however,  be  repeated 
here  as  io  mail  time  required  by  letters  in  transit  to  and  from 
our  various   foreign  markets.     The   export   manager's   ticklers 


146  PRACTICAL  EXPORTING 

should  be  arranged  with  a  full  knowledge  of  conditions  regard- 
ing each  market  addressed.  Of  course,  the  follow-up  letters 
must  one  and  all  be  devised  with  special  reference  to  the  foreign 
trade,  if  possible  with  special  reference  to  each  separate  foreign 
market — better  yet,  especially  written  for  individual  prospects, 
including  some  of  the  suggestions  already  offered  in  regard  to 
such  correspondence.  When  the  right  sort  of  a  mailing  list  is 
used,  when  one  is  assured  that  the  individual  concerns  he  is  ad- 
dressing are  or  ought  to  be  desirable  customers  for  his  goods, 
then  the  effort  to  enlist  them  as  customers  ought  not  to  be  given 
up  until  a  decided  Yes  or  No  is  returned. 

Arrangement  of  Follow-up  Letters. — As  to  the  composition 
of  follow-up  circular  letters  the  author  beliej/es  firmly  in  con- 
tinuing the  principle  of  emphasizing  in  each  letter  the  individ- 
ual features  of  goods  as  to  value  or  profit.  Perhaps  the  first 
letter  may  be  one  of  general  character  regarding  a  manufac- 
turer's whole  line  or  regarding  all  the  features  of  a  special 
article.  Letter  No.  2  may  take  up  and  enlarge  upon  one  spe- 
cial feature  of  a  given  article  selected  as  the  most  effective 
"opening  wedge."  Letter  No.  3  may  repeat  the  process,  re- 
ferring, however,  to  quite  a  different  article  or  quite  another 
feature  of  the  special  article  on  which  emphasis  is  being  placed. 
And  so  the  circulars  may  go  on  in  such  a  series  as  may  be 
thought  desirable.  Another  suggestion  is  offered  by  ]\Ir.  Wy- 
man,  who  is  recognized  as  an  expert  in  this  sort  of  work: 

"We  are  indeed  fortunate  if  our  product  is  one  which  ad- 
mits only  a  single  letter  instead  of  a  series.  The  majority  of 
lines  are  best  presented  by  a  well  built  chain  of  four  or  five 
letters,  each  having  its  ver}^  definite  part  to  play  in  the  effort 
to  secure  initial  orders.  Such  a  series  might  well  be  divided  as 
follows:  (1)  Description  of  product,  terms,  prices  and  ref- 
erences. (2)  Profit  on  resale.  (3)  Sales  assistance  offered. 
(4)   Quality  and  exclusive  advantages.     (5)   Recapitulation. 

"In  planning  such  a  series  the  enclosures,  and  literature  ac- 
companying under  separate  cover,  should  be  designed  to  carry 
out  the  idea  of  the  letter  itself,  not  be  a  cause  of  distraction 
from  the  letter.  Thus,  with  the  initial  letter  a  condensed  cata- 
logue and  list  of  references  as  enclosures  would  be  Excellent. 


FOREIGN  TRADE  CORRESPONDENCE  147 

With  the  second  letter  emphasize  profit  on  resale,  and  a  circular 
proving-  this  would  be  a  tangible  addition.  Material  for  your 
circulars  in  the  dealer's  interest,  specimens  of  shelf,  counter 
and  window  displays  or  a  detailed  plan  for  introductory  work 
would  go  far  to  prove  the  argument  of  sales  assistance  on  which 
the  third  letter  is  based.  Photographs,  diagrams  and  a  circular 
of  consumer  testimonials  will  back  up  our  claims  for  quality 
and  exclusive  advantages  made  in  our  fourth  letter,  while  for 
our  final  letter  a  complete  catalogue,  order  forms  and  if  possi- 
ble a  special  introductory  offer  at  a  net  price  will  usually  add 
to  the  written  appeal. 

"If  absolutely  no  results  come  from  your  series  of  three  or 
four  letters  the  fault  lies  with  you,  for  the  good  export  letter 
writer  can  produce  agency  rec^uests  for  fur-lined  gloves  from 
the  Sahara." 

The  same  authority,  writing  in  System,  suggests  another 
scheme  of  follow-up  letters,  as  follows: 

' '  Letter  1 :  Introduction  of  maker  and  product,  descrip- 
tion of  prices,  terms  and,  if  easy  to  state,  approximate  de- 
livery cost.  Letter  2:  Service  or  sales  cooperation.  Letter 
3 :  Exclusive  advantages  in  the  product,  care  in  manufacture 
or  attractiveness  to  consumer.  Letter  4:  Summary  with  spe- 
cial offer."  But  he  goes  on  to  advise  differentiation  in  the 
character  of  follow-ups: 

"A  fine  line,  however,  should  be  drawn  between  the  persist- 
ence which  irritates  and  the  persistence  which  educates.  Con- 
sequently, from  the  moment  it  is  clear  that  mail  orders  are  not 
securable,  the  type  of  correspondence  which  indicates  that  a 
reply  would  be  a  courtesy  should  be  dropped,  and  a  campaign 
intended  to  acquaint  the  merchant  with  the  manufacturer's 
products,  policies,  service  and  reliability  without  any  greater 
necessity  for  an  answer  than  a  printed  advertisement  would  im- 
ply, should  replace  the  aggressive  sales  ar^iment." 

Yet  another  use  of  a  follow-up  system  is  suggested  in  the  fol- 
lowing: "The  closing  step  in  securing  foreign  trade  by  sales- 
men comes  in  selling  by  mail  prospective  customers  located  but 
not  sold  by  the  traveler.  There  are  many  good  reasons  which 
prevent  even  the  ablest  salesman  from  opening  such  accounts, 


148  PRACTICAL  EXPORTING 

but  it  is  an  old  saying  in  export  sales  circles  that  'the  man 
should  show  better  than  an  even  break  and  the  follow-up  pay 
the  dividends.'  " 

ADJUSTING  BUSINESS  DIFFERENCES 

With  the  growth  to  any  considerable  size  of  an  export  busi- 
ness, differences,  disputes,  claims  and  sometimes  belated  collec- 
tions have  to  be  handled  by  correspondence.  These  business 
troubles  are  inseparable  from  any  large  business,  whether  for- 
eign or  domestic.  Since  it  is  not  often  possible  for  a  manufac- 
turer or  his  factory  representative  personally  to  visit  the  cus- 
tomer in  whose  case  trouble  has  arisen,  we  have  here  one  more 
reason  for  the  studious  attention  that  must  be  given  to  the 
handling  of  foreign  letters.  It  is  all  too  easy  to  antagonize  the 
foreigner  several  thousand  miles  away  by  a  thoughtless  word 
or  phrase  which  would  be  accepted  here  in  the  United  States  as 
a  mere  formality,  and  in  so  doing  destroy  the  foundation  on 
which  what  might  be  a  profitable  and  satisfactory  later  business 
has  been  built.  It  is  probable  that  almost  as  much  American 
export  business  has  thus  been  ruined  as  has  ever  been  started. 
This  is  not  a  trifling  matter.  It  is  one  of  the  most  serious  prob- 
lems of  any  foreign  trade  relations.  The  man  who  will  assert, 
"I  don't  care  whether  my  customer  likes  it  or  not,"  has  no 
place  among  American  exporters. 

Adjusting  Claims. — Claims  made  by  foreign  customers  may 
be  of  various  sorts  and  prompted  by  differing  motives.  The 
commonest  are,  perhaps :  clams  for  inferiority  of  goods  to  sam- 
ples or  to  goods  previously  shipped;  claims  for  short  ship- 
ment; claims  that  the  wrong  articles  have  been  sent,  with  re- 
sulting demands  for  credit  in  full,  instructions  for  disposition 
of  the  goods  in  the  hands  of  the  customer,  or  requests  for  re- 
bates or  extra  discounts. 

Such  claims  may  be  honestly  intended  or  they  maj^  be  made 
by  those  who  have  been  described  as  cMcaneurs,  that  is,  people 
habitually  inclined  to  take  advantage  of  every  technicality,  who 
regard  it  as  an  evidence  of  business  shrewdness  to  seek  every 
possible  advantage. 

The  manufacturer  must  examine  these  claims  with  an  abso- 
lutely impartial  mind.     He  must  give  his  customers  the  bene- 


FOREIGN  TRADE  CORRESPONDENCE  149 

fit  of  the  doubt  in  every  case  where  possible  to  do  so.  If  his 
export  packing  system  has  been  scrupulously  painstaking  and 
exact  along  lines  which  will  later  be  discussed,  he  may  be  able 
to  determine  to  his  own  satisfaction  that  the  exact  quantities  as 
invoiced  were  actually  shipped  and  that  precisely  the  identical 
goods  ordered  and  invoiced  were  shipped.  In  sojne  instances 
he  may  be  able  to  assure  himself  beyond  doubt  in  his  own  mind 
that  the  goods  shipped  were  identical  in  quality  and  descrip- 
tion with  goods  formerly  supplied,  or  with  samples  from  which 
ordered.  In  most  cases,  however,  there  will  remain  a  possible 
doubt  on  this  score. 

It  is  the  custom  in  the  United  States  for  a  manufacturer  to 
put  implicit  reliance  on  affidavits  made  by  his  clerks  as  to 
quantities,  etc.,  of  shipments.  No  doubt  this  practice  is  justi- 
fied to  a  certain  extent,  yet  the  instances  of  mistaken  affidavits 
of  this  sort  which  have  almost  certainly  come  to  light  in  the 
experience  of  any  large  shipper  should  be  sufficient  to  deter  him 
from  placing  too  implicit  confidence  in  such  affidavits  when 
they  concern  trade  with  customers  so  far  distant  that  acknowl- 
edgments of  error  cannot  be  made  easily,  quickly  or  gracefully. 

The  author  writes  with  some  feeling  on  this  subject,  for  at 
one  time  when  in  charge  of  a  business  establishrhent  in  a  for- 
eign country-  he  received  a  case  of  goods  from  an  American 
manufacturer  which  was  invoiced  as  containing  one  dozen  more 
of  a  certain  article  than  were  actually  received.  As  the  case 
itself  was  fully  packed  and  afforded  not  a  single  inch  of  room 
for  the  missing  dozen  articles,  it  was  clear  that  the  manufac- 
turer had  blundered  in  shipping.  In  response  to  a  claim  there 
was  forwarded  the  usual  shipping  clerk's  affidavit  that  the  in- 
voice as  submitted  was  correct  and  that  full  invoiced  quantity 
had  been  shipped.  Since  it  was  clearly  a  physical  impossibility 
that  this  should  have  been  the  case,  and  as  the  manufacturer 
intimated  that  the  receivers  of  the  goods  were  liars,  business 
with  the  shippers  in  question  abruptly  ended  for  good.  The 
finish  of  that  manufacturer  in  that  instance  was  not  so  much 
due  to  the  confidence  he  placed  in  his  shipping  clerk's  sworn 
statement  as  it  was  to  the  tone  of  the  manufacturer's  corre- 
spondence. The  author,  in  his  first  business  experience  as  ship- 
ping clerk  in  a  factory,  was  himself  guilty  of  making  similarly 


150  PRACTICAL  EXPORTING 

mistaken  affidavits,  and  more  than  once  was  chagrined  to  find 
that  goods  which  he  had  sworn  had  been  shipped  were  later 
actually  discovered  still  in  stock.  In  the  instance  just  above 
referred  to,  he,  as  an  American,  was  therefore  prepared  to  smile 
tolerantly  over  the  affidavit  submitted,  but  he  could  not  over- 
look the  manufacturer's  impertinent  and  offensive  written 
words.  Importers  in  other  countries  are  usually  jealous  of  their 
dignity. 

Very  naturally  when  a  fair-minded  and  conscientious  manu- 
facturer satisfies  himself,  upon  making  thorough  inquiry,  that 
the  goods  shipped  were  in  every  respect  in  agreement  with  the 
order  and  with  his  invoice,  he  will  object  to  making  allowances 
that  are  claimed  and  prefer  either  to  have  the  goods  in  question 
placed  at  his  disposition  for  return  to  this  country  or  for  turn- 
ing over  to  some  other  nearby  customer,  or  he  will  be  disposed 
to  insist  that  the  buyer  retain  them  in  accordance  with  invoice 
terms.  However,  he  must  remember  that  he  is  at  a  great  dis- 
advantage, the  goods  are  out  of  his  possession,  in  most  cases  it 
would  cost  more  than  the  difference  in  question  to  cause  them 
to  be  returned  to  the  United  States,  and  in  few  cases  is  it  con- 
venient to  place  the  goods  with  some  other  customer.  The  ship- 
per's only  recourse  is  to  the  courts  of  law,  and  lawsuits  any- 
where abroad  are  expensive  and  in  every  respect  highly  unde- 
sirable. While,  therefore,  a  manufacturer  may  be  disposed  to 
sit  tight  and  insist  upon  his  demands  being  fully  met,  yet  it  is 
a  question  if  in  such  cases,  wlien  reasonableness  and  diplomatic 
fairness  have  failed  to  bring  the  customer  to  terms,  it  would 
not  be  better  in  every  respect,  as  well  as  cheaper,  to  meet  the 
demands  made  or  to  compromise  them.  Thereafter  the  manu- 
facturer may  close  his  books  to  the  customer  in  question  or  he 
may,  with  his  eyes  open  to  the  customer's  disposition  and  prac- 
tice, continue  business  on  such  strict  lines  as  he  can  lay  down, 
naming  future  prices  which  will  involve  ample  profits  to  cover 
possible  claims  and  allowances. 

But  first  of  all  the  manufacturer  must  adopt  the  principle 
that  he  must  never  be  too  cock-sure  and  he  should  thoroughly 
overhaul  his  factory  organization,  especially  his  shipping  de- 
partment, to  make  certain  that  similar  complaints  on  the  same 
grounds  cannot  possibly  be  justified  in  the  future. 


FOREIGN  TRADE  CORRESPONDENCE  151 


THE  USE  OF  THE  CABLE 

Every  exporter  will  sooner  or  later  encounter  the  necessity 
of  using  the  cable  in  negotiations  with  his  foreign  customers, 
probably  with  increasing  frequency  as  his  export  trade  grows. 
A  prominent  New  York  export  merchant  has  estimated  that 
not  less  than  one-third  of  all  American  export  business  is  trans- 
acted by  cable.  Early  among  his  preparations  for  the  devel- 
opment of  export  business  a  manufacturer  must,  therefore, 
provide  for  exchanging  cablegrams  with  his  foreign  customers 
in  the  most  economical  fashion.  So  doing  w'ill  require  the 
choosing  and  registration  of  a  cable  address  for  himself,  the 
selection  of  codes  to  be  employed  and,  very  frequently,  provi- 
sion in  catalogues  for  code  names  applying  to  different  articles, 
parts,  combinations,  etc.,  possibly  code  terms  for  invoice  use. 
Ultimately,  perhaps  when  the  business  has  developed  to  one 
of  large  volume  involving  frequent  exchange  of  cablegrams,  he 
will  find  it  desirable  to  compile  a  special  private  cable  code  as 
appl^'ing  to  his  own  business.  Like  most  other  details  of  ex- 
port trade,  this  also  grows  in  course  of  time  from  simple,  pri- 
mary arrangements  to  such  complications  as  large  and  profit- 
able transactions  may  make  necessary  or  worth  while.  It  will 
be  understood  that  we  can  here  only  consider  the  use  of  the 
cable  in  business  as  is  customary  in  times  of  peace.  War-time 
restrictions  and  regulations  often  prohibit  the  use  of  codes  and 
of  cable  addresses,  besides  involving  censorship  and  delay. 
Normality,  few  countries  forbid  code  messages. 

Registration  of  Cable  Addresses — One  great  distinction  be- 
tween cablegrams  and  ordinary  domestic  telegrams  consists  in 
the  general  use  of  a  cable  address.  Each  word  in  a  cablegram 
must  be  paid  for,  including  the  address  and  signature.  Great 
economy,  therefore,  is  found  in  the  adoption  of  a  single  w^ord 
to  represent  the  name  of  the  individual  or  firm  and  the  local 
street  address.  Such  a  cable  address  is  registered  wdth  the  com- 
petent authorities,  and  all  arriving  messages  bearing  such  ad- 
dresses are  properly  delivered.  Two  words  must,  of  course,  be 
used  in  the  address,  one  representing  the  name  of  the  corre- 
spondent (and  his  street  and  number),  the  other  the  iovm  in 
which  he  is  located.     Only  in  the  case  of  very  minor  and  in- 


152  PRACTICAL  EXPORTING 

significant  towns  is  it  necessary  to  telegraph  also  the  country 
or  the  province  or  state  in  which  located.  In  almost  every  in- 
stance a  memorandum  as  to  country  of  destination,  not  to  be 
cabled,  suffices  for  the  instruction  of  the  despatching  office. 

In  the  United  States,  where  there  are  a  good  many  towns 
or  cities  in  different  States  bearing  the  same  name,  that  one 
which  is  the  largest  or  most  prominent  is  assumed  by  telegraph 
companies  to  be  the  destination  intended  if  no  other  is  specially 
designated.  Thus,  a  cablegram  addressed  to  "Rochester"  will 
be  delivered,  in  the  absence  of  instructions,  to  Rochester,  N.  Y., 
not  to  Rochester,  N.  H.,  or  Rochester,  Minn.  But,  unless  the 
sender  has  indicated  to  the  despatching  office  that  the  town  he 
wants  to  reach  is  in  the  United  States,  the  message  may  go  to 
Rochester,  England. 

Code  addresses  chosen  for  registration  should  be  filed  with  the 
Central  Bureau  for  Registered  Addresses,  main  office  New  York, 
branches  in  all  cities.  They  must  not  be  more  than  ten  letters  in 
length  and  must  be  pronounceable.  It  is  desirable  in  the  se- 
lection of  a  word  for  the  address  that  care  be  taken  to  choose 
one  whose  spelling  will  minimize  possible  errors  in  transmission 
through  the  mixing  or  mistranslation  of  the  Morse  signals  rep- 
resenting the  different  letters,  and  one  not  confliicting  with  pre- 
vious registrations.  Interior  shippers  should  consult  the  local 
telegraph  office;  New  York  shippers,  the  Central  Bureau. 

Cable  Routes. — While  both  of  the  two  great  American  tele- 
graph companies  operate  ocean  cables,  yet  messages  transmitted 
by  either  will  in  many  countries  be  delivered  by  one  and  the 
same  agency.  That  is,  in  England  and  in  many  other  coun- 
tries the  telegraphs  are  a  Government-owned  institution,  and 
no  matter  how  despatched  from  this  country  messages  are  de- 
livered by  the  Government  offices.  On  the  other  hand,  in  de- 
spatching cablegrams  from  such  countries  senders  may  instruct 
the  Government  telegraph  office  as  to  the  transatlantic  or  other 
cable  system  over  which  they  prefer  to  have  their  messages 
sent. 

While  there  are  a  number  of  cable  companies  operating  lines 
from  New  York  and  from  other  points  on  the  American  sea- 
board, it  is  not  necessary  for  a  manufacturer  in  the  interior  to 
pay  any  attention  to  the  individual  cable  routes.  Registration 
with  the  local  offices  of  the  one,  or  two,  domestic  telegraph  com- 


FOREIGN  TRADE  CORRESPONDENCE  153 

panies  is  sufficient  for  the  address,  while  oversea  messages  filed 
with  local  offices  will  be  forwarded  by  whatever  cable  company 
the  chosen  telegraph  company  prefers.  On  the  other  hand, 
the  exporter  who  is  located  in  New  York  City,  where  messages 
are  delivered  directly  by  receiving  cable  companies,  in  some  eases 
has  a  choice  of  routes  by  which  to  despatch  his  cablegrams. 

Plain  Language  Cablegrams. — Excepting  as  influenced  by 
the  requirements  of  certain  countries,  it  is  probable  that  com- 
paratively few  cablegrams  are  sent  exclusively  in  plain  lan- 
guage. On  the  other  hand,  a  combination  of  plain  language- 
with  code  words  is  quite  common.  Regulations  as  to  admissi- 
ble words,  their  spelling,  length,  count,  etc.,  may  be  obtained 
at  any  telegraph  office. 

Figures  ought  never  to  be  cabled  in  messages,  even  if  writing 
them  out  in  letters  involves  payment  for  two  or  three  extra 
words.  There  is  absolutely  no  check  possible  to  the  receiver 
when  figures  are  received.  Many  a  costly  mistake  has  occurred 
through  the  transmission  of  prices  in  figures  instead  of  words. 

Selection  of  Cable  Codes. — Everj^  exporter  should  own  or 
have  access  to  one  or  more  of  the  code  books  in  most  common 
use  throughout  the  world.  His  letter-head  should  show  not 
only  his  registered  cable  address,  but  also  the  names  of  the 
codes  which  should  be  employed  in  cable  correspondence  with 
him.  It  is  not  necessary  that  the  exporter  should  personally 
own  copies  of  several  different  code  books,  or  indeed  even  one 
of  them.  If  he  can  arrange  with  neighbors  or  friends  who  al- 
ready own  copies  of  such  codes  to  have  access  to  them  when  oc- 
casion necessitates,  that  will  answer  his  first  requirements,  or 
he  may  establish  reciprocal  relations  with  friends  who  may  own 
one  code  and  himself  purchase  a  copy  of  another  code,  thus 
enabling  both  houses  to  advertise  the  facility  of  using  two  or 
several  codes  instead  of  one  only. 

Doubtless  the  code  which  is  in  most  general  use  in  Europe  is 
the  old  A  B  C  (4th  Edition),  but  this  code  was  one  of  the  first 
which  attained  wide  use  and  is  by  no  means  equal  to  the  re- 
quirements of  modern  commerce.  The  ABC  5th  Edition  is 
a  later  compilation,  but  is  not  so  widely  distributed  or  in  such 
general  use,  although  a  good  deal  of  a  favorite  in  Latin  Amer- 
ica.   Lieber's   Standard   Code  and  the  Western  Union   Cable 


154  PRACTICAL  EXPORTING 

and  Bentley's  Code  have  all  in  recent  years  obtained  a  wide  sale 
and  are  more  modern  and  comprehensive  than  the  others  named. 
These  four  codes  are  the  ones  more  usually  employed  for  general 
cable  correspondence.  There  are  many  special  codes  adapted 
for  different  kinds  of  business — engineering,  grain,  cotton,  min- 
ing, stock  exchange,  banking,  etc.  The  main  thing  to  be  con- 
sidered in  the  selection  of  a  code  is  its  wide  distribution  and 
common  use.  A  new  code  or  new  edition  of  an  old  code  usually 
requires  a  considerable  period  of  time  to  attain  wide  and  popu- 
lar vogue.  This  is  one,  perhaps  the  only,  objection  to  the  com- 
paratively new  "5  letter"  codes,  so  called,  the  advantage  of 
which  is  the  economy  obtained  in  combining  into  one  code  word 
of  ten  letters  two  distinct  code  expressions. 

Use  of  Code  Language. — Extreme  care  should  be  taken  in 
writing  all  messages  for  transmission  by  cable.  This  applies 
both  to  messages  in  plain  language  but  more  especially,  of 
course,  to  messages  in  code,  neither  the  words  nor  the  context 
of  which  afford  the  slightest  clue  to  operators  as  to  possible  mis- 
takes in  spelling  or  significance.  Invariably  cable  messages 
should  be  typewritten,  and  it  is  usually  considered  safer  to  use 
only  capital  letters,  spacing  between  each  letter,  with  wide 
spaces  between  the  several  words,  perhaps  putting  only  two 
words  to  a  line,  and  spacing  adequately  between  each  line  of 
the  message — the  object  being  to  afford  operators  not  the  small- 
est chance  of  mistaking  each  letter  of  each  word.  Every  code 
message  should  be  carefully  reviewed  and  checked  by  some  one 
else  than  the  man  who  first  compiles  it.  Too  many  precautions 
to  ensure  absolute  accuracy  cannot  b©  taken.  Similar  care 
should  be  shown  in  decoding  messages  received  from  abroad. 
All  should  be  worked  out  and  checked  by  at  least  two  different 
people. 

Confirmation  of  Cablegrams. — Every  cablegram  despatched 
or  received  should  be  confirmed  by  letter.  This  confirmation 
should  preferably  be  made  on  a  separate  sheet  especially  de- 
signed for  the  purpose.  It  should  repeat  word  for  word  the 
text  of  the  original,  including  address  and  signature,  and  ev- 
ery precaution  must  here  again  be  repeated  to  ensure  literal 
accuracy.  In  confirming  code  messages  it  is  customary  to 
write  the  words  of  the  text  in  a  column  down  the  left  side  of  the 


FOREIGN  TRADE  CORRESPONDENCE  155 

paper  and  opposite  each  word  its  interpretation  from  the  code 
book,  in  order  that  one's  foreign  corespondents  may  know  ex- 
actly what  words  have  been  transmitted  or  received  and  how 
each  has  been  interpreted.  As  cablegrams  always  mean  haste, 
confirmations  should  be  despatched  by  earliest  possible  mail,  as 
of  course  every  resulting  act  should  follow  as  fast  as  may  be 
possible. 

Compilation  of  Private  Codes. — While  at  the  outset  of  an 
export  business  it  is  not  vitally  necessary  to  devise  special  or 
extraordinary  means  of  cable  correspondence,  apart  from  the 
standard  code  books,  yet  when  the  point  is  reached  that  an  ex- 
port catalogue  is  prepared,  it  must,  if  nothing  more  in  this 
special  regard,  contain  code  names  referring  to  each  one  of  the 
different  articles  enumerated  and,  if  possible,  each  variation  or 
other  detail  connected  with  each  article.  Such  code  terms  must 
be  intelligently  selected  from  vocabularies  of  words  acceptable 
to  the  cable  companies  and  must  be  chosen  with  careful  regard 
to  possible  conflict  with  words  used  in  general  correspondence 
in  code  books  that  are  employed  or  that  may  be  employed. 
Numerous  vocabularies  of  acceptable  code  words  are  published. 

In  addition  to  the  code  nomenclature  used  in  catalogues,  in- 
voices sent  to  foreign  customers  should  each  be  given  a  code 
word  to  facilitate  cable  reference  to  that  invoice,  if  necessary, 
and  sometimes  it  is  thought  desirable  to  give  each  separate  item 
in  each  invoice  its  own  individual  code  word  so  that  cable  in- 
quiry, duplicate  orders  for  items,  etc.,  may  be  assisted. 

The  preparation  of  complete  private  codes  is  not  a  difficult 
or  a  complicated  matter.  It  involves,  however,  a  great  deal 
more  space  than  can  here  be  given  the  subject.  Most  private 
codes,  it  may  be  observed,  are  nowadays  based  on  the  numerical 
system  in  which  combinations  of  ten  or  twelve  figures  are  ar- 
ranged in  groups  of  two  or  three,  each  group  applying  to  a 
special  phase  of  business  and  each  allowing  of  a  hundred  or  a 
thousand  permutations.  The  completed  groups,  ten  or  twelve 
figures  in  all,  are  then  translated  into  letters  making  pro- 
nounceable combinations  or  "words,"  of  not  exceeding  ten  let- 
ters in  length,  which  are  accepted  by  the  cable  companies  of 
the  world.  Almost  always  checks  for  each  word  are  provided 
for.     This  brief  reference  sounds  decidedly  complicated.     The 


156  PRACTICAL  EXPORTING 

system,  however,  is  in  reality  simplicity  itself.  It  can  be  un- 
-derstood  after  only  a  few  hours'  study,  while  it  is  possible  with 
a  few  days'  work  to  devise  a  sufficiently  comprehensive  code 
applying  to  any  special  business  which  will  immensely  facili- 
tate cable  correspondence  and  economy  in  cable  tolls.  If  in- 
disposed to  make  up  his  private  code  in  his  own  office  the  ex- 
porter has  available  the  service  of  many  code  compilers,  who 
for  a  respectable  fee  will  undertake  the  work  for  him. 

Responsibility  in  Cable  Messages. — Telegraph  and  cable 
companies  are  generally  absolved  legally  from  mistakes  made  in 
the  transmission  of  code  messages.  Cipher  messages,  it  has 
been  held,  are  in  nature  and  purpose  unintelligible  to  any  ex- 
cepting the  sender  and  the  addressee,  and  this  has  been  held  in 
England,  Canada  and  the  United  States  to  relieve  transmitting 
companies  from  any  save  nominal  damages,  excepting  only  in 
the  event  of  negligence. 

Responsibility  for  mistakes  occurring  in  the  transmission  of 
plain  language  messages  is  seldom  accepted  by  transmitting  com- 
panies and,  usually,  resulting  losses  are  not  sufficient  to  justify 
legal  action  against  them.  In  consequence  the  liability  for  losses 
that  may  have  been  incurred,  as  for  example,  through  the 
wrongful  transmission  of  a  price,  may  become  a  matter  of  dis- 
sension between  buyer  and  seller.  Legally  this  responsibility 
seems  to  be  placed  on  the  one  who  has  originated  the  transac- 
tion. Thus,  if  a  foreign  buyer  cables  to  an  American  supplier 
requiring  a  cable  reply,  the  latter  the  American,  is  regarded 
as  the  buyer's  agent  in  transmitting,  as  the  buyer  has  wished, 
the  information  required  by  cable.  On  the  other  hand,  if  it  is 
the  American  supplier  who  of  his  own  initiative  makes  an  offer 
or  otherwise  addresses  an  important  communication  to  a  for- 
eign buyer,  then  it  is  the  American  house  which  is  responsible 
for  errors  that  may  occur  in  resulting  cablegrams.  Of  course, 
it  is  sometimes  possible  to  prove  glaring  mistakes  to  transmit- 
ting companies  so  forcibly  that  settlements  can  be  readily  ob- 
tained from  them,  either  by  despatcher  or  receiver  of  the  mes- 
sages involved,  as  their  responsibility  may  be  determined  ac- 
cording to  the  foregoing  rule. 

It  may  here  be  noted  that  in  this  country  all  cable  companies 
will  upon  demand  repeat  without  charge  words  of  a  message 


FOREIGN  TRADE  CORRESPONDENCE  157 

which  are  unintelligible  and  which  have  evidently  been  muti- 
lated in  course  of  transmission.  When,  therefore,  the  exercise 
of  a  little  ingenuity  fails  in  trying  different  ways  of  spelling  a 
word  that  is  blind  and  is  not  to  be  translated  from  the  code 
known  to  be  employed,  then  the  transmitting  company  may  be 
asked  to  have  that  word  repeated,  and  often  enough  repetition 
makes  it  intelligible.  Ingenuity  in  correcting  mutilated  spell- 
ings is  assisted  by  reference  to  the  "mutilation  tables"  and  the 
explanation  of  possible  "tran'sformations  of  telegraphic  signals" 
which  are  included  in  many  of  the  leading  code  books,  and  very 
especially  by  the  arrangement  of  code  words  in  terminational 
order.  However,  if  the  message  or  the  word  involved  is  of  great 
importance,  no  correction  or  guess  as  to  correction  should  ever 
be  accepted  as  final  until  confirmation  from  the  sender  or  trans- 
mitting cable  company  has  been  received. 


CHAPTER  VI 

TRAVELING  SALESMEN  ABROAD 

Employment  of  Traveling  Salesmen  Depends  on  Growth  of  Ex- 
port Business— Successful  Factory  Salesman  Preferred  to  an 
Expert  in  Foreign  Languages — Qualities  Desirable  in  the  Man 
to  Represent  Americans  Abroad — Travelers  Who  Carry  Lines 
from  Several  Factories — Conditions  Encountered  in  Selling 
Goods  in  Other  Lands — Duties  on  Samples — Salesmen's 
Licenses  in  Some  Countries. 

IT  is  extremely  doubtful,  to  say  the  least,  whether  any  suc- 
cessful exporter  of  to-day,  American  or  European,  initiated 
his  efforts  to  find  markets  in  foreign  countries  by  sending 
out  a  corps  of  salesmen  to  look  for  orders.  It  is  usually,  and 
with  excellent  logic,  believed  that  a  manufacturer  in  seeking  to 
build  up  a  foreign  trade  must  walk  before  he  can  run.  As  a 
rule,  he  awaits  the  results  of  less  expensive  initial  efforts  before 
he  attempts  to  send  traveling  men  into  distant  markets.  He 
defers  their  employment  until  the  growth  and  prospects  of  trade 
otherwise  secured  by  earlier  tentative  efforts  seem  to  warrant 
sending  salesmen,  or  perhaps  to  demand  them.  Most  manufac- 
turers are  convinced  that  first  of  all  they  must  learn  where  they 
can  sell  their  goods  and  what  goods  they  can  sell.  Also,  and 
equally  important,  that  they  must  study  the  best  ways  of  getting 
trade  in  different  markets  as  well  as  the  most  desirable  fashion 
of  handling  that  trade  when  secured. 

WHEN  TO  EMPLOY  TRAVELING  SALESMEN 

Traveling  salesmen  have  been  called  the  ideal  way  of  develop- 
ing any  trade,  foreign  or  domestic.  Undoubtedly  this  is  true — 
when  one  has  thoroughly  convinced  himself  that  he  knows  exactly 
what  he  wants  to  do.  To  send  traveling  men  even  to  the  most 
attractive  foreign  markets  is  the  height  of  absurdity  until  ar- 


TB  AVE  LING  SALESMEN  ABROAD  159 

rangements  have  been  perfected  at  the  factory  for  giving  proper 
and  adequate  attention  to  the  execution  of  foreign  orders  and  the 
general  conduct  of  a  thoroughly  organized  export  department. 
Furthermore,  it  is  never  to  be  forgotten  that  no  ordinary  manu- 
facturer can  possibly  support  his  own  traveling  men  in  every 
foreign  market. 

On  the  other  hand,  some  tempting  markets  lie  so  close  to  us 
that  it  is  really  astonishing  that  more  American  traveling  sales- 
men do  not  visit  them.  Mexico,  when  in  normal  condition,  and 
Cuba  are  examples  of  such  markets.  A  Pullman  sleeping  car 
leaving  St.  Louis  used  to  arrive  in  Mexico  City  before  another 
car  leaving  St.  Louis  at  the  same  time  arrived  in  San  Francisco. 
Similar  conditions  will  undoubtedly  return  before  long.  It  only 
costs  a  man  about  $165  for  transportation  to  make  the  trip  from 
New  York  to  Havana,  Cuba,  and  return.  These  are  examples  of 
temptations  to  aggressively  minded  manufacturers  to  seek  trade 
in  attractive  markets  through  traveling  salesmen.  Seriously 
determined  manufacturers  and  salesmen  will,  however,  do  well 
to  avoid  "cruises"  promoted  by  steamship  companies  and  "com- 
mercial tours"  engineered  by  chambers  of  commerce.  Both  may 
be  enjoyable  junkets,  laudable  in  some  respects,  but  the}^  are  not 
business-getters. 

Select  the  Right  Man  Only. — It  cannot  be  too  emphatically 
urged  that  manufacturers  and  exporters  must  on  no  account  ever 
send  abroad  any  but  the  salesman  the}'  believe  to  be  the  right  man 
in  every  sense  of  that  term.  The  American  house  will  be  judged 
in  foreign  countries  by  the  representative  it  sends  to  them.  IMore 
than  that,  our  wnole  people,  the  United  States  of  America,  will  be 
judged  nationally  by  the  travelers  whom  our  manufacturers  send 
out.  The  foreign  buyer  will  regard  it  as  inconceivable  that  a 
high  class  American  house  should  tolerate  a  representative  vulgar 
or  incompetent.  He  will  probably  form  his  ideas  of  American 
standards,  of  American  moralit.y  and  courtesy,  from  the  salesman 
whom  we  send  to  seek  his  orders.  The  greenhorn,  the  bore,  the 
under-educated  salesman,  is  the  butt  for  ridicule  in  foreign 
lands,  and  his  house  will  share  in  it.  It  is  the  absurdest  as  it  is 
likely  to  be  the  costliest  of  mistakes  to  regard  a  foreign  business 
trip  as  a  desirable  junket  for  some  favored  employee  who  may 
have  no  qualifications  whatever  for  the  task,  and  who  does  not 


160  PRACTICAL  EXPOBTING 

intend  to  stick  to  that  line  of  work.  Export  traveling  is  a  far 
more  serious  proposition  than  domestic. 

Salesmen  as  Credit  Judges. — No  salesman  should  ever  be 
sent  into  any  foreign  territories  to  solicit  business  for  the  ac- 
count of  manufacturers  unless  his  judgment  as  to  the  making  of 
credits  is  deemed  equally  as  satisfactory  to  his  principals  as  is 
his  ability  to  make  sales.  In  all  foreign  countries  an  order  is 
regarded  as  a  contract,  equally  as  binding  on  the  supplier  of 
the  goods  as  on  the  customer  himself.  It  is  assumed  by  responsi- 
ble buyers  when  they  attach  their  signature  to  a  contract-order 
placed  with  the  authorized  representative  of  a  manufacturer  that 
that  representative  has  satisfied  himself  of  their  desirability  as 
customers,  and  that  the  firm  he  represents  will  be  bound  to  ship 
the  goods  as  per  order,  just  as  the  customer  himself  will  be  bound 
to  accept  and  pay  for  the  goods  in  accordance  with  contract 
terms. 

However,  manufacturers  in  all  countries,  not  only  in  the 
United  States  but  in  England  and  Continental  manufacturing 
countries  as  well,  even  though  reposing  the  utmost  confidence 
in  the  judgment  and  discretion  of  their  foreign  salesmen,  usually 
take  measures  to  confirm  a  new  representative's  opinion  of  pro- 
posed customers  in  one  way  or  another.  Ways  may  in  excep- 
tional cases  even  be  found  of  declining  orders  which  never  should 
have  been  booked,  while  recognizing  the  sanctity  of  the  contract 
entered  into  by  the  agents. 

Confidence  in  the  Salesman. — The  traveling  representative 
of  a  factory  who  visits  foreign  countries  in  search  of  new  busi- 
ness, or  for  the  development  of  business  already  established, 
ought  to  be  a  good  deal  more  than  a  mere  salesman.  To  be 
desirable,  the  business  secured  must  be  profitable.  No  imagin- 
able means  of  investigating  credits  can  approach  in  satisfaction 
the  personal  inquiries  made  on  the  spot  by  the  traveling  man. 

In  this  c'onnection,  George  li.  Richards,  export  manager  of 
the  Remington  Typewriter  Company,  remarked  in  the  course  of 
an  address  before  a  class  in  exporting  of  the  New  York  Y.  M. 
C.  A.: 

"The  manufacturer  must  be  prepared  to  place  proper  confi- 
dence in  the  judgment  and  conclusions  of  his  representative. 
Unless  he  is  willing  to  discuss,  and  possibly  accept,  the  sugges- 


TRAVELING  SALESMEN  ABROAD  161 

tions  offered  as  the  result  of  work  done  in  his  behalf,  and  the 
plans  developed  by  study  of  conditions  and  recjuirements  in  the 
territory  where  business  is  sought,  much  of  the  work  and  at- 
tendant expense  will  be  thrown  away.  Nothing  discourages  a 
good  man  more  than  to  have  the  conclusions  he  has  arrived  at 
after  much  sacrifice  and  labor  treated  indifferently  or  disre- 
garded. If  he  is  big  enough  for  his  work,  his  judgment  is  good 
enough  to  be  made  the  basis  of  the  working  policy  of  the  house." 

Mistakes  of  Ignorant  Salesmen. — The  folly  of  sending  out  an 
ignorant  or  unprepared  man  to  assume  the  responsibilities  in- 
separable from  being  thrown  upon  his  own  resources  in  foreign 
countries  may  be  illustrated  in  the  story  of  a  salesman  for  a 
manufacturer  of  glassware  who  some  years  ago  started  on  a  trip 
around  the  world.  lie  progressed  through  Australia  to  India, 
whence  he  was  peremptorily  called  back  home  by  cablegram, 
He  found  from  the  start  of  his  efforts  to  secure  orders  that  pros- 
pective customers  were  not  satisfied  with  ordinary  quotations 
f.o.b.  works,  with  extra  charges  for  barrels,  indefinite  costs  of 
freight  to  New  York,  etc.,  and  that  to  get  any  business  it  was 
necessar}^  for  him  to  make  prices  including  all  charges  through 
to  the  foreign  seaport.  He  was  not  accustomed  to  figuring  such 
charges,  but  blundered  along  taking  orders  as  best  he  could. 
Every  one  of  these  orders  had  to  be  declined  by  the  factory,  and 
his  recall  followed  promptly  upon  their  receipt  at  the  home 
office  and  consequent  careful  figuring.  The  fact  that  the  factory 
was  afterward  able,  in  the  course  of  correspondence,  to  induce 
some  buyers  in  Australia  to  confirm  their  orders  at  higher  and 
suitable  prices,  and  actually  laid  the  foundation  for  a  consider- 
able later  business,  is  not  an  argument  against  the  foolishness  of 
sending  out  similarly  incompetent  men. 

Factory  Support  of  Salesmen. — The  foreign  salesman  must 
have  the  invariably  loyal  and  enthusiastic  support  of  his  fac- 
tory. He  needs  a  loose  rein  and  confidence  that  no  matter  what 
happens  his  house  will  back  him  up  to  the  limit.  Nothing  puts 
a  more  effective  damper  on  the  spirits  of  a  salesman  traveling  in 
a  strange  country  than  the  receipt  of  cold  letters  of  criticism 
devoid  of  any  friendly,  helpful  or  encouraging  expressions. 

One  of  the  oldest  and  most  highly  respected  among  New  York 
exporters.  Welding  Ring,  of  Mailler  &  Quereau,  expresses  him- 


162  PRACTICAL  EXPORTING 

self  as  follows  in  regard  to  the  support  which  foreign  traveling 
men  should  receive :  ' '  The  home  office  must  be  prepared  to  back 
up  its  representatives  and  traveling  agents  in  every  respect,  show 
their  confidence  in  them,  carry  out  any  agreements  or  contracts 
entered  into,  and  see  that  the  business  is  operated  on  just  as 
straightforward  and  careful  a  basis  as  if  everything  was  con- 
ducted here.  Unless  these  agents  and  representatives  possess 
this  confidence  and  also  the  backing  of  the  home  office,  they  will 
be  ver}'  greatly  handicapped  and  their  success  become  extremely 
doubtful." 

Repeated  Foreigri  Trips. — The  manufacturer  who  plans  to 
develop  his  trade  in  foreign  markets  through  traveling  salesmen 
must  by  no  means  anticipate  that  a  single  trip  of  a  salesman  will 
be  enough.  The  salesman  on  his  first  visit  may,  certainly  should, 
get  some  business  started,  but  what  about  its  later  development? 
Periodical  if  not  regular  subsequent  visits  are  essential.  They 
are  essential  both  for  the  sure  and  large  growth  of  the  trade 
and  in  order  to  keep  abreast  of  competition.  In  the  beginning 
a  salesman  ought  to  visit  a  desirable  foreign  market  at  least  once 
a  3^ear  to  impress  his  goods  on  buyers  and  to  convince  them 
that  his  firm  is  in  the  field  to  stay.  When  well  established  his 
trips  need  not  be  so  frequent.  Moreover,  it  is  highly  desirable 
that  the  man  who  has  been  initiated  into  the  export  business 
through  a  single  trip  abroad,  be  given  means  of  retaining  his 
insight  into  foreign  business  life,  customs  and  points  of  view. 
It  is  the  experience  of  every  one  who  has  been  engaged  for  any 
length  of  time  in  export  trade  that  the  man  who  does  not  make 
frequent  foreign  trips  is  bound  to  lose  his  sj^mpathetic  appre- 
ciation of  customers  abroad,  just  as  the  traveler  who  remains  too 
long  away  from  home  in  foreign  markets  is  quite  sure  to  grow 
away  from  the  factory  point  of  view,  forget  home  policies  and 
factory  limitations.  Similarly  it  is  not  always  wise  to  keep  a 
traveler  continuously  at  work  in  one  territory.  It  is  often  better 
to  give  him  an  opportunity  of  exploring  and  developing  a 
new  field  in  addition  to  all  or  some  of  his  old  ones. 

One  Visit  not  Enough. — Another  story  may  illustrate  the 
inadequacy  of  a  single  visit  to  a  foreign  market.  An  American 
manufacturer  of  hay  presses  once  upon  a  time  visited  Italy  and 
succeeded  in  inducing  a  prominent  importer  of  agricultural  ma- 


TRAVELING  SALESMEN  ABROAD  163 

chinery  to  introduce  his  presses.  The  manufacturer  returned 
home.  Orders  followed  from  Italj'  for  three  or  four  years,  at 
first  in  fairly  satisfactory  and  increasing  volume.  Then  orders 
began  to  fall  off.  The  manufacturer  wrote  earnest  letters  of 
inquiry  as  to  causes,  but  discovered  that  his  agents  did  not  seem 
anxious  to  enlighten  him  with  details.  The  present  writer,  mak- 
ing a  trip  through  Italy,  was  asked  to  investigate.  The  reasons 
for  a  decline  in  orders  for  these  American  hay  presses  were  dis- 
covered. Competing  manufacturers  of  another  nation,  attracted 
by  the  considerable  business  that  had  been  established,  found 
that  Italian  farmers  liked  to  attach  their  hay  press  to  their 
threshing  machine  and  run  both  from  the  same  engine.  They 
accordingly  put  an  extra  pulley  on  their  separator  and  operated 
the  hay  press  by  a  belt  from  this  new  pulley.  It  was  acknowl- 
edged b}^  the  Italian  importer  that  he  did  not  like  these  other 
presses  so  well  as  the  American,  but  the  American  manufacturer 
had  not  turned  up  in  Italy  to  see  how  his  machines  were  getting 
along  and  whether  there  was  anything  he  could  do  to  improve 
sales,  while  the  importer  had  no  other  object  in  canying  on  his 
business  than  to  sell  the  machines  that  sold  most  easily  and 
quickly  and  at  best  profits.  Accordingly,  the  American  ma- 
chines were  neglected. 

"Whether  or  not  the}^  regained  any  of  the  ground  lost  is  beside 
the  question.  No  ground  at  all  ought  to  have  been  lost.  The 
American  manufacturer  should  not  have  contented  himself  with 
one  visit  to  Italy.  He  ought  not  to  have  waited  four,  five,  six 
years  before  personally  greeting  his  customer  a  second  time.  If 
it  is  worth  while  sending  a  traveling  salesman  to  a  market 
at  all,  it  is  even  better  worth  while  following  up  the  first  visit 
by  later  ones,  even  if  it  is  not  thought  necessary  to  make  regular 
or  annual  or  seasonal  trips  for  the  purpose  of  seeking  in  person 
periodic  orders.  Trade  once  established,  no  matter  how,  will 
not  continue  forever  to  take  care  of  itself.  It  must  be  nursed 
and  cultivated  if  it  is  to  be  developed  adequately. 

FOREIGN  BORN  VS.  SUCCESSFUL  FACTORY 
SALESMEN 

All  of  us  are  favored  by  an  endless  stream  of  advice  as  to  the 
necessity  of  sending  abroad  salesmen  able  to  speak  the  language 


164  PRACTICAL  EXPORTING 

of  tlie  country  which  they  are  to  visit.  The  South  American 
obsession,  which  seems  to  claim  so  many  of  our  advisers  and 
critics  for  its  own,  is  chiefly  responsible  for  the  emphasis  laid 
on  this  advice,  which  apparently  always  refers  to  travelers  who 
are  to  be  sent  to  Latin  America.  But  Paul  T.  Cherington,  Pro- 
fessor in  the  Harvard  Graduate  School  of  Business  Administra- 
tion, remarks:  "A  man  may  know  forty  languages  and  not  be 
able  to  sell  goods  in  any  one  of  them.  On  the  other  hand,  he 
may  be  a  very  clever  salesman  at  home  and  a  very  poor  one 
for  Latin  America."  Furthermore,  what  about  the  necessity  of 
speaking  languages  by  the  salesman  sent  to  Europe  ?  Must  he  be 
able  to  speak  every  tongue  which  he  encounters  in  traveling 
from  Lisbon  to  Stockholm  and  Petrograd?  Whatever  else  is  to 
be  said  in  this  connection  it  will  still  remain  true  that  an  enor- 
mous volume  of  highly  profitable  business  has  undoubtedly  been 
established  in  foreign  markets  by  American  manufacturers  and 
traveling  salesmen  who  have  been  able  to  express  themselves 
in  the  English  language  only. 

Foreign  Language  Experts. — It  has  been  an  unfortunate 
fact  in  the  history  of  American  export  trade  that  our  manufac- 
turers have  sometimes  seemed  to  regard  as  a  sufficient  recom- 
mendation of  many  an  applicant  his  pronounced  foreign  accent 
in  speaking  the  English  language  and  his  claim  that  he  is  a  native 
or  has  long  been  a  resident  of  some  foreign  country.  The  main 
thing  in  the  selection  of  an  export  salesman  is  not  his  familiarity 
with  foreign  languages  but  his  ability  to  sell  goods.  A  friend 
writing  from  Rio  de  Janeiro  several  years  ago  observed:  "A 
good  many  men  are  sent  out  from  the  United  States  who  are 
excellent  translators  but  poor  salesmen.  It  is  easier  for  a  man 
to  pick  up  a  knowledge  of  the  language  of  Brazil,  for  example, 
after  he  gets  there  than  it  is  for  him  to  acquire  the  language 
of  the  line  that  he  is  selling.  Far  worse,  however,  is  the  type 
who  knows  his  line  but  knows  neither  the  language  of  the  country 
nor  good  breeding.  There  is  a  type  of  American  salesman  who 
blusters  and  curses  his  way  along,  who  for  the  credit  of  his 
country  and  the  honor  of  his  house  ought  never  to  be  permitted 
to  visit  these  shores.  That  type  of  American  who  walks  rough 
shod  and  loud  mouthed  through  every  custom  and  form  of  cities 


TRAVELING  SALE83IEN  ABROAD  165 

that  were  old  when  Chicago  was  a  frontier  post — these  do  their 
country  and  their  firms  infinite  harm. ' ' 

It  would  seem  that  in  the  selection  of  a  foreign  salesman 
the  question  of  his  ability  to  speak  the  language  of  the  market 
which  he  is  to  visit  may  to  some  extent  depend  upon  the  charac- 
ter of  the  trade  which  he  is  expected  to  cultivate,  the  class  and 
caliber  of  the  customers  whom  he  is  to  call  upon.  Evidently  a 
propaganda  to  be  carried  on  among  small  retail  dealers  or  the 
ultimate  consumer  must  entail  a  far  more  intimate  acquaintance 
with  the  language  which  these  classes  speak  than  would  be  en- 
tailed if  calls  are  to  be  made  only  on  the  large  merchants,  chiefly 
wholesalers  and  professional  importers.  The  business  relations 
of  the  latter  and  frequent  trips  abroad  on  their  own  account  will 
almost  certainly  have  developed  a  considerable  familiaritj-  with 
other  languages  than  that  of  their  immediately  local  market. 

It  has  been  found  possible  by  many  an  American  speaking 
no  language  except  English  to  do  business  in  all  sorts  of  strange 
countries  either  through  finding  an  important  customer  who 
could  talk  to  him  in  English  or  through  the  employment  of  inter- 
preters, extremely  unsatisfactory  as  the  latter  method  invariably 
is.  None  the  less  it  is  hard  to  understand  how  a  man  who  has 
not  at  least  a  smattering  of  the  language  of  the  people  among 
whom  he  finds  himself  can  manage  to  get  through  in  comfort  the 
ordinary  routine  of  life  on  the  street,  in  the  hotels,  restaurants 
and  on  the  railways.  The  old  joke  that  when  one  finds  himself 
in  a  country  where  English  is  not  understood  then  the  remedy 
is  to  "speak  louder,"  does  not  materially  assist  in  working  a 
market  expeditiously  and  economically. 

Certainly,  if  nothing  more,  the  foreign  salesman  must  possess 
the  knack  at  languages  which  is  born  into  some  men — the  ability 
quickly  to  pick  up  common  phrases  and  the  essential  words  of  a 
language,  and  this  wnll  help  a  lot  in  every  phase  of  his  life 
abroad.  It  was  a  prominent  Latin  American  who  declared  that 
if  a  visitor  to  South  America  knows  only  a  few  words  of  Spanish, 
is  only  able  to  stumble  through  the  most  elementary  phrases, 
he  will  actually  receive  a  more  careful  and  polite  attention  from 
prospective  clients  than  will  the  salesman  who  is  a  fluent  con- 
versationalist in  Spanish.     The  amateur  linguist's  very  blun- 


166  PRACTICAL  EXPORTING 

ders  may  be  made  jokes  by  him  and  contribute  to  the  establish- 
ment of  an  acquaintance  and  even  friendship  on  the  pleasantest 
basis,  with  prospects  who  are  certain  to  show  the  greatest 
courtesy  in  treating  his  language  shortcomings.  But  the  essen- 
tial in  the  foreign  traveling  man  is  beyond  any  question  not  the 
ability  to  speak  several  languages;  the  essential  is  an  ability  to 
sell  goods. 

Successful  Domestic  Salesmen  Abroad.— Since  the  essential 
thing  in  representatives  sent  abroad  is  this  ability,  the  question 
arises  as  to  the  desirability  of  transferring  a  successful  domestic 
salesman  to  one  or  several  foreign  fields.  The  advantages  such 
a  man  possesses  over  a  stranger  are  obvious.  He  knows  his 
goods  and  his  firm.  He  knows  how  the  goods  are  manufactured 
and  what  goes  into  them.  Moreover,  he  has  had  practical  and 
sometimes  pretty  hard  experience  in  learning  how  they  are  ef- 
fectively demonstrated  to  buyers.  While  selling  goods  to  for- 
eigners differs  in  some  minor  particulars  from  that  art  as 
practiced  in  the  United  States,  yet  experiences  on  the  road  at 
home  are  undoubtedly  the  best  preparation  for  meeting  buyers 
anywhere. 

It  has  been  noted  that  there  is  a  very  large  number  among 
the  big  importers  of  goods  in  all  foreign  countries  who  speak 
English.  Some  of  them  are  able  to  converse  in  our  language 
even  though  they  do  not  trust  themselves  to  put  their  queer 
English  grammar  and  spelling  on  paper,  have  no  stenographers 
able  to  transcribe  English  letters,  and  therefore  might  not,  from 
their  letters,  be  expected  to  be  able  to  do  business  in  English. 
Almost  every  authority  of  wide  experience  recommends  the  use 
of  the  successful  domestic  salesman  for  foreign  work  in  prefer- 
ence to  the  man  who  has  nothing  to  recommend  him  save  an 
ability  to  speak  foreign  languages.  Insistence  that  the  traveling 
salesman  must  speak  Spanish  comes  almost  exclusively  from  peo- 
ple who  seem  to  have  Latin  American  markets  solely  in  mind, 
yet  we  find  the  High  Priest  of  Latin  American  interests,  John 
Barrett,  late  Director-General  of  the  Pan  American  Union,  an- 
nouncing his  opinion  in  an  address  before  the  American  Hard- 
ware Manufacturers'  Association  in  the  following  language: 

"You  say  to  me,  'Mr.  Barrett,  it  is  so  difficult  to  get  men,* 
and  in  answer  I  am  going  to  tell  you  something  that  may  sur- 


TRAVELING  SALESMEN  ABROAD  167 

prise  you.  Here  is  a  man  who  knows  all  about  your  plant,  all 
about  its  productive  capacity,  under  just  what  conditions  you 
can  compete  and  sell  and  how  you  can  change  your  products  if 
necessary,  vary  your  machinery,  etc.,  to  adapt  them  to  the  field ; 
but  he  has  not  been  to  Latin  America,  he  does  not  know  the 
country  or  the  market  or  the  field.  On  the  other  hand,  you  have 
a  man  who  knows  nothing  about  j^our  plant,  nothing  about  j'our 
capacity  to  meet  competition,  but  he  knows  all  about  the  field 
and  speaks  the  language.  Invariably,  if  you  have  to  make  a 
choice,  take  the  first  one,  the  man  who  knows  your  plant.  I 
speak  from  having  had  experience  with  hundreds  and  hundreds 
of  men  while  minister  down  there,  and  those  whom  I  have  seen 
go  from  my  office  and  come  back  again.  The  man  who  thor- 
oughly knows  your  plant  will  pick  up  very  soon  a  knowledge  of 
the  field  and  of  the  language,  if  he  is  clever  enough  to  know  your 
plant ;  while  the  other  man,  if  he  is  down  there  and  has  not  the 
capacity  to  understand  your  plant  and  productive  capacity,  may 
lead  you  into  all  kinds  of  mistakes.  Of  course,  if  you  can  get  a 
man  who  knows  your  plant  thoroughly,  who  knows  the  field  thor- 
oughly, who  knows  the  languages  thoroughly,  you  will  have  an 
ideal  man." 

T.  W.  Van,  of  the  Koken  Barber  Supply  Company,  of  St.  Louis, 
]Mo,,  spoke  at  the  second  National  Foreign  Trade  Convention 
to  a  group  of  so-called  "smaller"  manufacturers.  He  said: 
"Starting  in  as  a  small  manufacturer  with  practically  no  for- 
eign business,  but  which  to  this  year  shows  a  volume  of  a  quarter 
of  a  million  dollars,  none  of  which  was  got  along  the  lines  that 
have  been  urged  upon  us  to  follow  if  we  want  to  get  foreign 
business,  I  want  first  to  take  issue  with  the  idea  that  a  man  has 
got  to  know  the  language  before  going  into  foreign  countries.  I 
want  to  tell  you  gentlemen  and  the  small  manufacturers  who 
are  desirous  of  selling  their  goods  abroad,  that  if  we  who  went 
down  had  not  gone  because  we  did  not  know  the  language,  and 
waited  until  we  found  that  particularly  gifted  man  who  has  been 
pictured  to  us  to-day  as  the  only  man  that  should  go,  we  would 
still  be  waiting  and  our  goods  would  not  be  in  use  in  those  coun- 
tries to-day. 

"The  pioneers  of  America's  foreign  business  did  not  know 
the  language  of  the  people  they  went  to  trade  amongst,  nor  did 


168  PRACTICAL  EXPORTING 

that  fact  keep  them  from  going.  The  getting  of  foreign  trade  is 
not  such  a  hard  matter.  You  need,  first,  a  representative  who 
knows  your  goods  and  your  factory  thoroughly.  This  represen- 
tative must  be  intelligent,  with  plenty  of  initiative.  Such  a  man 
will  lay  a  foundation  for  your  business,  even  if  he  does  not  know 
a  word  of  the  language.  Interpreters  can  be  hired  and,  person- 
ally, I  would  much  prefer  a  thoroughly  informed  capable  house 
salesman  and  an  interpreter  to  many  native  salesmen  saturated 
with  the  'mafiana  habit.' 

"I  recall  the  first  trip  I  made  into  Mexico.  I  was  unable  to 
ask  for  a  glass  of  water.  Other  salesmen  who  accompanied  me 
for  other  concerns  were  in  a  like  plight.  All,  however,  were 
absolutely  fortified  with  a  complete  knowledge  of  their  goods. 
All  went  through  the  country  and  came  out  with  a  splendid 
business.  I  would  not  discourage  the  idea  of  salesmen  adapting 
themselves.  This  they  should  do,  and  the  intelligent  man  will. 
He  will  just  naturally  absorb  the  language,  and  this  he  should 
improve  upon  each  trip.  I  would  emphasize,  however,  the  neces- 
sity of  sending  a  man  who  is,  first,  your  best  salesman,  and  let 
the  language  be  of  secondary  importance. ' ' 

When  it  is  desired  to  use  a  successful  domestic  salesman  for 
foreign  work  a  new  question  may  present  itself.  It  may  per- 
haps be  difficult  to  persuade  the  best  salesman  in  a  manufac- 
turer's employ  to  abandon  his  home  territory,  to  give  up  a 
profitable  clientele,  a  line  of  agreeable  acquaintances  and  many 
intimate  friends.  He  may  perhaps  prefer  what  he  regards  as  a 
"sure  thing"  to  the  chances  of  an  adventure  in  strange  lands. 

TRAINING  MEN  FOR  FOREIGN  WORK 

The  solution  of  this  problem  undoubtedly  lies^in  the  selection 
of  special  men  and  their  training  for  a  considerable  length  of 
time  for  the  express  purpose  of  using  them  in  foreign  work  ex- 
clusively. The  more  widely  and  the  faster  this  practice  is 
adopted  the  more  quickly  will  the  commercial  interests  of  the 
United  States  be  adequately  and  creditably  represented  abroad. 
It  will  involve  taking  young  men  and  putting  them  through  a 
rigorous  apprenticeship  in,every  detail  of  the  business.  It  means 
personal  interest  and  attention  on  the  part  of  the  partners  or 


TRAVELING  SALESMEN  ABROAD  169 

the  ofiScers  of  the  house.  Young  men  cannot  simply  be  thrown 
overboard  and  left  to  swim  out  for  themselves. 

Attractions  of  Foreign  Traveling. — The  raw  material  for 
foreign  traveling  salesmen  abounds.  There  is  no  lack  of  young 
men  nowadays  who  are  attracted  to  the  export  field  either  be- 
cause of  its  novelty  or  because  they  think  they  see  in  it  tempting 
futures.  The  fascination  of  foreign  travel  is  undoubtedly  the 
most  potent  attraction  in  the  case  of  many  of  these  young  men 
who  quite  forget  that  it  does  not  mean  a  series  of  pleasure  cruises 
on  palatial  passenger  steamers,  that  real  work — often  excep- 
tionally hard,  disagreeable  and  irritating — is  required.  Any 
man  of  experience  with  the  ordinary  hotels,  railway  lines  and 
mule-back  travel  in  Latin  America,  will  enlighten  the  beginner 
in  this  regard.  In  the  majority  of  cases  the  novelty  of  travel 
in  foreign  countries  quickly  wears  off.  The  Wanderlust  stays 
where  it  is  born  in  a  man,  even  though  in  the  course  of  years 
he  becomes  blase,  but  the  other  sort  rather  quickly  tires  of 
travel  abroad.  Yet  the  business  of  foreign  traveling  should  be  a 
permanent  profession,  or  at  least  one  lasting  through  long  years. 
It  seems  doubtful,  therefore,  if  mere  curiosity  to  see  the  world 
is  the  right  sort  of  a  motive  to  seek  in  the  most  desirable  candi- 
dates for  such  positions. 

Rewards  of  Success  in  Foreign  Travel. — What  future  has 
the  young  man  who  seeks  a  position  as  foreign  traveler  to  look 
forward  to?  His  case  is  no  different  from  that  of  the  domestic 
salesman,  j^et  it  is  radically  different.  His  future  depends  solely 
on  his  personal  ability  and  success.  He  has,  however,  this  ad- 
vantage over  the  fraternity  whose  wanderings  are  limited  to  our 
own  borders.  He  is  one  of  a  comparatively  limited  number  of 
men  who  know  foreign  markets  and  their  trade,  the  characteris- 
tics of  their  merchants  and  ways  of  handling  them  successfully. 
He  may  command  a  higher  salary  than  any  but  a  select  few 
command  at  home,  he  may  either  continue  abroad  or  in  due  time 
return  home  to  become  the  head  of  a  big  export  department,  or 
indeed  graduate  into  almost  any  position.  Several  examples  can 
be  quoted  of  men  who  have  made  their  reputation  in  export  work 
who  are  to-day  the  presidents  or  heads  of  great  companies.  On 
the  other  hand,  the  successful  foreign  traveler  may  establish 


170  PRACTICAL  EXPORTING 

abroad  important  and  even  great  branches  of  his  American  enter- 
prise. Tempting  rewards  of  varying  character  are  undoubtedly 
within  his  reach.  From  the  very  outset  of  his  career  he  should 
receive  unusually  liberal  remuneration.  In  this  regard,  George 
H.  Richards,  manager  of  the  export  department  of  the  Reming- 
ton Typewriter  Company,  remarked  in  the  course  of  his  address 
before  the  New  York  Y.  M.  C.  A.  class  in  exporting : 

' '  The  manufacturer  must  realize  that,  inasmuch  "as  the  work 
calls  for  all  of  the  selling  ability  he  would  expect  in  a  domestic 
salesman,  and  much  more  in  other  directions,  the  cost  is  neces- 
sarily in  proportion.  It  is  high  class  work  requiring  high  class 
men,  and  high  class  compensation  must  follow.  It  is  useless  to 
expect  anything  else.  The  work  would  better  not  be  undertaken 
at  all,  than  undertaken  with  men  who  are  incompetent  or  un- 
qualified. A  cheap  man  means  cheap  work.  This  must  neces- 
sarily be  the  result  unless  the  reward  attending  it  is  in  keeping 
with  the  requirements 

"I  would  offer  the  following  policy  as  the  one  which  would 
be  productive  of  the  best  results  to  the  American  manufacturer 
for  interesting  and  holding  the  right  kind  of  men  for  foreign 
work.  Treat  them  liberally  in  the  matter  of  compensation ; 
place  full  confidence  in  their  judgment  and  conclusions ;  encour- 
age and  appreciate  their  work  even  if  relatively  of  small  volume, 
hold  out  to  them  the  idea  that  the  best  prospect  for  ultimate 
preferment  is  through  successful  work  in  the  foreign  field,  with 
all  Df  its  attendant  sacrifices  and  deprivations ;  and  assure  them 
that  their  value  to  the  business  will  be  such  as  the  result  of  this 
experience,  that  nothing  the  business  has  to  offer  will  be  beyond 
attainment.  Several  of  our  large  houses  are  to-day  managed 
in  many  important  departments,  from  the  chief  executive  down, 
by  men  who  have  made  a  name  for  themselves  through  foreign 
work. ' ' 

How  Men  Should  Be  Trained.— It  is  quite  useless  to  expect 
to  turn  out  a  satisfactory  foreign  salesman  in  the  course  of 
two  or  three  months.  Two  or  three  years'  training  will  certainly 
be  necessary.  That  training  should  proceed  from  the  ground 
up  through  all  the  details  of  factory  work  necessary  to  give  an 
adefiuate  idea  of  how  the  goods  are  made,  of  what  goes  into 
them,  of  their  costs,  of  variations  in  processes  of  manufacture 


TRAVELING  SALESMEN  ABROAD  171 

and  in  the  character  of  the  finished  products  which  are  possible 
in  the  organization  as  it  exists.  Training  in  export  practice 
must  be  complete ;  above  all,  he  must  have  actual  sales  experience 
on  the  road  here  in  this  country — and  all  of  the  time  the  candi- 
date should  be  studying  one  or  several  languages  in  schools  where 
languages  are  taught  in  a  practical  fashion,  and  in  dail3^  con- 
versational practice.  While  every  other  detail  is  important,  yet 
it  must  never  be  forgotten  that  if  a  man  cannot  sell  goods  here 
at  home  he  cannot  be  expected  to  sell  them  abroad. 

If  a  college  man  can  be  found  who  seems  to  possess  the  char- 
acteristics of  a  successful  salesman  he  will  very  likely  be  consid- 
ered the  most  promising  candidate.  He  should  boast  a  better 
general  education  in  the  so-called  liberal  branches  and,  in  conse- 
quence, perhaps  a  broader  outlook,  as  well  as  the  probable 
disposition  to  master  details  of  each  feature  of  his  work  and 
the  ability  to  master  them  quickly.  The  experience  of  many 
manufacturers  is  that  it  takes  a  year  or  two  for  the  college  man 
to  wear  off  some  of  his  disposition  to  look  at  things  in  an  easy- 
going, theoretical  way  and,  as  it  is  expressed,  "get  down  to 
brass  tacks."  With  due  allowance,  however,  and  if  he  receives 
from  his  employers  the  right  sort  of  consideration  and  attention, 
there  should  be  the  basis  in  a  college  man  for  the  best  sort  of 
foreign  representative. 

The  fact  that  comparatively  few  college-bred  men  develop  into 
salesmen  here  at  home  does  not  by  any  means  imply  that  among 
them  good  salesmen  are  not  to  be  found  by  the  exercise  of  judi- 
cious selection  and  svibsequent  drilling  and  experience;  or,  again, 
that  there  is  not  the  disposition  in  this  class  to  undertake  for- 
eign sales  work.  However,  sales  ability  is  the  first  consideration. 
Other  qualities  desirable  and  sometimes,  it  seems,  essential  in  a 
foreign  representative  can  undoubtedly  be  far  more  easily  im- 
parted than  can  the  ability  to  get  a  customer's  signature  to  an 
actual  order. 

QUALITIES  OF  A  FOREIGN  SALESMAN 

Lord  Chesterfield  did  not  begin  to  exhaust  the  list  of  qualities 
which  one  may  hope  for,  if  not  anticipate,  in  his  foreign  repre- 
sentatives. The  Admirable  Crichton  was  an  amateur  in  com- 
parison with   the  ideal  man  to  represent   American   business 


172  PRACTICAL  EXPORTING 

interests  to  foreign  buyers.  If  we  cannot  secure  our  ideal  repre- 
sentative, yet  some  approximation  to  our  ideal  must  be  sought 
in  the  man  who  will  be  thrown  on  his  own  resources  thousands 
of  miles  away  from  advisers,  even  in  spite  of  the  general  use  of 
the  cable  nowadays — who  must  represent  himself,  his  house  and 
his  country  in  strange  lands,  encountering  extraordinary  com- 
plications, unforeseen  difficulties,  running  into  unexpected  laws, 
customs  and  demands. 

Salesmanship  the  First  Essential. — Ability  to  make  sales  is, 
it  has  been  emphasized,  the  essential  thing  in  the  foreign  travel- 
ing man.  It  must,  however,  be  coupled  with  integrity.  The  man 
who  is  not  to  be  trusted  under  any  and  all  conditions  must  never 
be  sent  abroad,  no  matter  how  good  a  salesman  he  may  be.  A 
writer  in  a  contemporary  magazine  puts  the  qualities  desirable 
in  foreign  salesmen  in  the  following  order:  (1)  integrity,  (2) 
ability,  (3)  courtesy,  (4)  knowledge  of  the  language,  (5)  fixity  of 
purpose,  (6)  feeling  of  patriotic  responsibility.  The  present 
author  would  amplify  qualities  falling  under  the  second  class, 
ability.  It  should  apply  not  only  to  salesmanship,  but  it  should 
mean  that  the  foreign  traveler  be  exceptionally  versatile,  quick 
and  ingenious.  The  problems  which  he  will  meet  are  certain  to 
be  continually  changing  and  quite  unlike  anything  he  has  ever 
encountered  at  home.  He  must  be  able  to  solve  those  problems 
on  the  spot  and  to  the  satisfaction  and  profit  of  principal  and  cus- 
tomer alike. 

Salesman  as  Diplomat  and  Student. — The  foreign  traveling 
man  must  be  something  more  than  courteous.  He  must  be  a 
diplomat  and  a  psychologist,  much  more  of  both  than  any  do- 
mestic salesman;  able  promptly  to  appraise  foreign  character 
and  disposition,  to  "size  up"  his  customers  of  sundry  nationali- 
ties, to  recognize  their  strange  and  puzzling  idiosyncrasies,  meet 
their  "bluffs,"  duly  determine  their  commercial  honor  and  their 
creditability.  Psychology  is  thus  intimately  allied  both  with 
courtesy  and  general  ability.  In  addition  to  these  qualities  the 
foreign  traveler  should  be  widely  read  and  a  student  of  current 
affairs,  not  in  his  own  home  alone  but  in  all  countries,  and  es- 
pecially of  international  relations.  He  must  be  what  foreigners 
call  by  the  equivalent  of  our  word  "sympathetic."  He  must  be 
able  to  discuss  with  his  customer  something  more  than  mere  de- 


TRAVELING  SALESMEN  ABROAD  173 

tails  of  his  own  business.  While  he  must  know  something  about 
local  politics  he  must  be  able  dexterously  to  avoid  them  or  treat 
them  broadly  and  indulgently.  The  salesman  must  know  the 
general  features  at  least  of  the  history  and  geography  of  the 
country  in  which  he  finds  himself,  must  know  something  about 
the  cabinet  ministers,  the  heroes  of  its  history  and  its  litera- 
ture. If  no  more,  must  at  least  recognize  their  names  when  he 
hears  them.     This  means  study  and  broad,  intelligent  reading. 

As  Man  of  the  World. — He  should  be  a  man  of  the  world  in 
its  largest  sense,  entirely  at  home  in  his  evening  clothes,  and  ac- 
customed to  don  them  much  more  frequently  than  would  be  the 
case  in  a  trip  in  the  United  States.  He  wall  meet  the  biggest  and 
best  men  in  the  commercial  communities  of  the  countries  he 
visits.  If  he  is  the  right  sort  he  will  be  ' '  put  up  "  at  clubs,  very 
likely  invited  to  dinners  and  dances,  possibly  introduced  at  his 
customers'  homes.  In  some  parts  of  the  United  States  person- 
ality and  friendship  go  a  long  way  in  making  the  success  of  the 
salesman.  In  other  territories  here  at  home  there  are  almost 
negligible  considerations.  There  is  a  great  difference,  for  ex- 
ample, between  getting  business  in  New  York  and  getting  busi- 
ness in  St.  Louis.  It  is  so  in  foreign  countries  too.  Circum- 
stances vary,  business  is  on  essentially  cold-blooded  lines  in  one, 
W'hile  in  another  club  and  cafe  life  are  inevitable  precursors  to 
any  actual  business. 

Discouraging  Features  of  Work  Abroad. — AYe  may  again 
quote  the  views  of  Mr.  Richards,  when  export  manager  of  the 
Remington  Typewriter  Company,  this  time  as  to  the  qualities  de- 
sirable in  an  American  foreign  salesman: 

''A  promising  candidate  must  be  ready  to  make  sacrifices,  to 
suffer  personal  discomforts,  to  contend  against  severe  opposition, 
and  to  accustom  himself  to  the  lonesomeness  of  strange  and 
unusual  surroundings.  He  must  be  patient  and  able  to  hang  on 
— not  easily  discouraged  or  disheartened.  He  must,  to  a  certain 
extent,  live  in  the  future,  building  not  alone  for  himself  and  his 
immediate  concern,  but  also  that  he  by  his  work  may  add  to  the 
sum  total  of  American  commercial  progress.  He  must  be  broad 
and  liberal  in. his  views,  a  good  mixer  and  able  to  represent  with 
dignity,  not  alone  himself  and  his  house,  but  his  nation.  He 
must  know  his  own  business  absolutely,  and  let  the  other  man 


174  PRACTICAL  EXPORTING 

also  know  his.  He  must  be  proud  that  he  is  an  American  and 
jealous  to  sustain  that  honor  which  we  all  demand  shall  at  all 
times  attach  to  the  name.  There  hdve  already  been  too  many 
instances  of  commercial  men  posing  as  Americans  who  have  done 
much  to  belittle  the  name  abroad.  It  naturally  follows,  also, 
that  a  man  to  properly  qualify  for  the  work  must  be  practically 
foot-loose.  His  domestic  arrangements  must  be  such  that  he  is 
free  to  go  whenever  called,  to  any  point  desired,  and  to  remain 
as  long  as  business  may  demand.  Duty  must  supersede  all  other 
considerations.  Unfortunately,  domesticity  cannot  flourish  with 
the  man  prepared  to  commit  himself  to  the  arduous  requirements 
of  foreign  service.  Absence  from  home,  however,  should  in  his 
case  be  no  greater  than,  and  in  the  majority  of  instances  not  as 
great  as,  those  which  are  certain  to  be  entailed  upon  the  average 
naval  officer." 

Characteristics  to  Be  Avoided. — "Too  fresh"  is  the  common 
complaint  of  the  typical  American  drummer.  Evidently,  in 
view  of  our  list  of  the  desirable  qualities  in  a  foreign  salesman, 
freshness  must  be  absolutely  eliminated  from  his  make-up ;  so 
must  our  American  disposition  to  brag.  The  American  who  can 
find  nothing  better  to  talk  about  in  London  than  the  superiority 
of  American  street  cars,  American  hotels,  American  railways, 
and  who  comments  caustically  on  British  conservatism,  and  in- 
sists on  trying  to  show  his  customers  how  they  ought  to  do  busi- 
ness in  the  American  way,  will  have  a  good  deal  of  difficulty  in 
living  down  the  first  unpleasant  impressions  he  has  thus  created. 
It  may  be  doubtful  if  he  ever  succeeds  in  getting  the  business  he 
seeks,  if  any  business  worth  while.  Precisely  the  same  is  true  all 
around  the  world.  "When  in  Rome  do  as  the  Romans  do" 
holds  good  to-day,  in  principle.  Here  are  some  maxims  to 
be  remembered,  rather  bald,  and  a  few,  only,  among 
many: 

It  is  not  advised  to  send  abroad  a  salesman :  Who  chews  to- 
bacco; who  slaps  his  victims  on  the  back  and  perches  his  feet  on 
their  desks ;  who  thinks  or  says  he  thinks  there 's  only  one  ' '  God 's 
own  country";  whose  commonest  conversation  is  of  "little  old 
New  York"  and  the  glories  of  "the  great  White  Way" — al- 
though his  native  heath  is  probably  Oklahoma. 


TRAVELING  SALESMEN  ABROAD  175 


COMBINATION  FOREIGN  TRAVELERS 

Current  discussion  of  ways  to  be  adopted  by  American  manu- 
facturers to  take  advantage  of  the  undeniably  wonderful  oppor- 
tunities for  the  expansion  of  our  foreign  trade  has  resulted  in 
a  very  general  recommendation  that  manufacturers  combine  in 
their  efforts  to  develop  this  trade  in  order  to  reduce  what  are 
described  as  the  high  expenses  necessary.  Frequently  this 
scheme  is  put  forth  as  a  brand  new  discovery,  a  brilliant  idea 
which  has  just  been  originated.  It  is  nothing  of  the  sort.  It  is 
as  old  as  is  export  trade  on  modern  lines.  It  may  or  may  not  be 
successful.  It  is  one  of  the  problems  which  is  certain  sooner 
or  later  to  be  presented  to  every  manufacturer  who  has  the  small- 
est interest  in  foreign  markets. 

What  Is  a  "Combination"  Traveler? — A  combination  foreign 
traveling  salesman  may  carry  from  four  or  five  to  forty  or  fifty 
different  lines.  He  may  make  a  trip  around  the  world,  or  he 
may  confine  his  efforts  to  a  comparatively  limited  territory.  In 
any  case,  the  theory  is  that  each  manufacturer  included  in  the 
combination  will  secure  the  needed  representation  for  his  goods 
at  the  minimum  expense.  The  combination  traveling  man  usu- 
ally requires  from  each  manufacturer  whose  line  he  carries  a 
certain  definite  contribution  of  money,  aiming  to  make  the  total 
contribution  from  all  lines  represented  sufficient  to  cover  antici- 
pated expenses,  and  sometimes  also  his  own  remuneration  for 
time  devoted  to  the  effort.  Thus,  if  a  year's  trip  is  to  be  made 
and  the  expenses  are  approximated  at,  say  $10,000,  ten  manufac- 
turers may  be  asked  to  contribute  $1,000  each  in  cash.  Usually, 
provision  is  made  also  for  a  commission  to  be  paid  on  all  sales 
actually  made.  On  this  commission  the  traveling  man  may  de- 
pend for  his  own  profits  or  salary.  If  not  content  to  risk  all  of 
his  own  interests  the  traveler  may  make  his  anticipated  expense 
$15,000  instead  of  $10,000  and  ask  each  of  ten  contributing  man- 
ufacturers to  advance  $1,500  cash  instead  of  the  smaller  amount. 

The  combination  traveling  man  is  expected  to  carry  samples 
or  other  trade  ammunition  of  the  several  manufacturers  whom 
he  represents,  to  drum  the  trade  adequately  in  each  market  or 
each  city  that  he  visits,  to  establish  new  customers  or  develop  the 


176  PRACTICAL  EXPORTING 

business  of  old  customers,  just  as  would  an  individual  represen- 
tative of  each  manufacturer  in  the  combination. 

How  Combinations  Are  Formed. — Men  engaged  in  the  ex- 
port trade  in  varying  capacities,  and  young  men  who  think  they 
would  like  to  become  connected  with  the  export  trade,  are  often 
attracted  by  the  possibilities  of  making  foreign  trips  as  represen- 
tatives of  combinations  of  manufacturers.  It  is  proper  to  warn 
such  men  that  not  only  is  the  idea  anything  but  novel  but  that  no 
little  difficulty  will  be  experienced,  and  probably  many  weeks 
if  not  months  of  time  will  have  to  be  spent  in  the  effort  to  get 
together  the  requisite  combination. 

The  man  who  attempts  the  task  must  first  of  all  select  those 
kinds  of  goods  with  which  he  is  best  acquainted  or  which  he 
thinks  would  have  the  best  chances  for  profitable  sale  abroad,  and 
must  at  the  same  time  evolve  a  sales  plan  as  applying  to  certain 
foreign  fields  about  which  he  knows  a  good  deal.  He  must  for- 
mulate his  plan  and  his  knowledge  of  the  foreign  territory  to  be 
worked,  in  order  to  present  his  proposition  effectively  to  the 
manufacturers  whom  he  approaches.  When  he  has  determined 
upon  the  general  classes  of  goods  whose  sale  he  wishes  to  under- 
take, he  will  have  to  select  those  special  manufacturers  of  each 
article  whom  he  would  prefer  to  have  enter  his  combination  if 
they  can  be  persuaded  to  do  so.  He  usually  approaches  the  most 
desirable  manufacturers  first.  If,  for  any  reason,  they  are  not 
disposed  to  listen  to  his  arguments  then  he  has  to  seek  out  others 
making  similar  goods.  This  process  he  usually  finds  himself 
obliged  to  follow  out  through  a  rather  long  program. 

It  is  almost  invariably  necessary  to  approach  manufacturers 
in  person,  correspondence  rarely  bringing  results,  because  the 
idea  is  not  a  new  one  and  to  commend  it  to  any  manufacturer's 
favorable  consideration  there  must  be  very  strong  features  of  the 
plan,  or  the  personality  of  the  salesman  must  be  the  determining 
factor  which  ultimately  overcomes  the  opposition  of  the  manu- 
facturer to  the  proposal. 

Each  manufacturer  approached  is  usually  asked  to  contribute 
to  the  combination  his  agency  rights  for  the  territory  to  be  cov- 
ered in  addition  to  a  certain  sum  per  annum  or  per  month,  more 
often  payable  in  a  lump  sum  in  advance. 

In  order  to  have  any  chance  at  all  of  interesting  manufactur- 


TRAVELING  SALESMEN  ABROAD  177 

ers  of  the  most  desirable  lines  in  any  combination  of  this  sort,  it 
will  be  found  indispensable  for  the  salesman  to  put  up  an  excep- 
tionally strong  argument.  Above  all,  to  show  that  he,  the  sales- 
man, lias  had  experience  in  the  field  to  be  covered  or  at  least  in 
doing  export  business  in  allied  lines  to  that  field,  that  he  knows 
prospects  and  opportunities  and  conditions  in  the  field  thor- 
oughly, that  he  is  able  to  speak  the  language  of  the  trade,  that  in 
fact  he  really  knows  what  he  is  talking  about.  Most  manufac- 
turers nowadays  are  not  disposed  to  listen  to  schemes  of  this 
sort  advanced  by  amateurs. 

Advantages  of  Combination  Salesmen. — Clearly  the  chief 
recommendation  to  a  manufacturer  of  a  combination  representa- 
tive in  place  of  an  individual  factory  representative  is  the  re- 
duced expense  thus  required.  This  is,  of  course,  a  most  impor- 
tant consideration.  The  saving  is  large.  There  may  be  other 
advantages  also.  For  example,  the  manufacturer  of  a  "short 
line"  may  profit  by  having  his  goods  presented  by  the  same  sales- 
man who  handles  the  products  of  manufacturers  making  allied 
goods,  and  orders  may  be  thus  obtained  which  would  otherwise 
be  missed  because  buyers  would  not  be  disposed  to  place  orders 
for  very  small  lots. 

Again,  the  salesman  carrying  a  variety  of  goods  in  which  a 
buyer  may  be  interested  may  have  a  stronger  argument  for 
securing  the  attention  of  buyers  than  the  mere  representative  of 
one  line  only.  A  dealer  in  electrical  supplies,  for  example,  might 
not  be  disposed  to  show  very  much  interest  in  the  traveling  man 
who  has  only  dry  batteries  to  offer,  whereas,  he  might  be 
prompted  by  curiosity  if  nothing  else  to  look  over  the  assorted 
lines  carried  by  a  combination  traveler  who  has  samples  to  show 
not  only  of  dry  batteries  but  of  electric  bells,  switches,  lamps, 
sundry  automobile  accessories,  etc.  Each  one  of  these  manufac- 
turers might  receive  at  least  trial  or  sample  orders,  particularly 
if  arrangements  had  been  made  for  combination  shipments  from 
the  United  States  of  all  orders  secured,  whereas  such  a  trial  ship- 
ment in  the  case  of  an  individual  manufacturer  might  be  so  insig- 
nificant that  the  dealer  would  not  have  the  courage  to  suggest  it. 

Objections  to  Combination  Salesmen. — If  the  combination 
representative  does  not  carry  closely  allied  lines,  it  is  evident  that 
his  efforts  must  be  scattered,  the  trade  on  which  he  must  call  of 


178  PRACTICAL  EXPORTING 

varied  character,  and  a  great  waste  of  time  and  effort  result. 
The  combination  traveler  who  has  a  line  of  dry  batteries  and 
another  line  of  men 's  shoes,  a  line  of  glazed  kid  leather,  a  line  of 
padlocks,  and  so  on  through  perhaps  ten  or  twenty  different 
branches  of  industry,  may  find  some  country  storekeepers  at 
various  points  in  his  itinerary  who  will  be  interested  in  all  the 
goods  which  he  shows,  but  at  the  principal  commercial  centers 
which  he  visits  he  will  have  to  call  on  hardware  dealers,  shoe 
dealers,  shoe  manufacturers,  electrical  supply  houses,  etc.,  in- 
stead of  being  able  to  devote  his  time  continuously  to  one  species 
of  dealer  or  importer. 

Unfortunately,  most  combination  traveling  men  carry  varie- 
gated assortments  of  goods.  This  usually  happens  because  it  is 
the  combination  man  himself  who  initiates  the  idea  of  a  foreign 
trip  and  propounds  it  with  more  or  less  success  to  sundry  manu- 
facturers, endeavoring  to  enlist  the  interest  of  each  in  the  trip 
that  he  proposes  and  in  making  the  necessary  contribution  to- 
ward expenses.  Since  it  is  the  combination  salesman  himself  who 
usually  originates  the  scheme,  his  ambition  is  not  always  inspired 
by  the  interests  of  the  manufacturers  represented,  and  it  is 
probable  that  some  lines  will  be  taken  on  as  a  last  resort,  to  com- 
plete the  list  of  contributors  to  the  fund,  rather  than  with  real 
conviction  that  success  will  be  made  of  such  lines. 

Again,  the  motives  of  the  man  who  proposes  a  combination 
trip  have  sometimes  to  be  examined  with  care.  Such  proposi- 
tions are  by  no  means  uncommon.  Sometimes  they  come  from 
capable  men,  very  much  in  earnest;  sometimes  they  come  from 
men  who  apparently  can  find  nothing  else  to  do;  some- 
times from  men  whose  object  seems  to  be  to  get  a  chance  to  see 
the  world.  Sometimes,  too,  they  are  advanced  by  men  of  un- 
savory reputation  and  previous  fraudulent  trips  of  similar  char- 
acter, when  contributions  have  been  obtained  but  the  represen- 
tative has  progressed  no  farther  than  an  American  seaport  or 
the  nearest  foreign  port  most  economically  reached.  A  thor- 
ough examination  of  such  proposals  is  invariably  in  order. 
Every  reference  offered  by  the  man  who  proposes  such  a  com- 
bination must  be  investigated,  his  history  carefully  looked  into 
and   information  as  to  his  character  and  record  sought  from 


TRAVELING  SALESMEN  ABROAD  179 

every  one  who  has  ever  had  any  connection  with  him,  in  addition 
to  those  references  which  have  vohintarily  been  offered. 

Experiences  with  Combination  Salesmen. — It  almost  always 
results  in  examining  propositions  of  this  ^ort  that  it  is  found 
that  the  traveling  man,  if  he  has  made  similar  combination  trips 
in  the  past,  has  been  successful  in  making  sales  for  one  or  two  of 
the  firms  represented  but  that  others  of  his  principals  have  not 
received  adequate  returns  for  their  investment,  or  have  received 
no  returns  at  all.  There  are  always  a  number  of  manufacturers, 
therefore,  who  are  ready  to  rise  up  and  denounce  the  salesman 
in  question  as  "a  thief  and  a  robber"  because  he  has  taken  their 
money  and  has  not  returned  value  received.  They  are  justified 
in  doing  so  in  all  too  many  cases,  yet  the  most  honest  of  men  may 
be  mistaken  in  their  opinion  of  the  saleability  of  a  given  line  of 
goods.  Not  a  few  of  these  combination  efforts  in  years  gone  by 
have  failed  and  have  been  unjustly  denounced  by  manufacturers 
whose  goods  were  originally  taken  in  the  best  of  faith,  but  which 
it  was  found  impossible  to  introduce  satisfactorily  in  the  markets 
visited  for  good  and  sufificient  reasons  of  one  sort  or  another. 
Given  the  traveling  man's  honesty  of  purpose,  the  manufacturer 
in  such  a  case  has  no  cause  for  denouncing  his  failure.  The  sales- 
man 's  risk  was  involved  no  less  than  the  manufacturer 's,  and  the 
latter  ought  to  take  his  medicine  also. 

Probably,  however,  most  failures  are  to  be  ascribed  to  the  un- 
desirable composition  of  the  "combination"  which  has  been  en- 
gineered by  the  salesman.  Either  too  many  lines  have  been 
carried,  making  impossible  any  adequate  attention  to  each,  or 
the  lines  have  been  too  diversified,  requiring  undue  haste  in  a 
given  market  in  order  to  visit  all  buyers  interested,  with  conse- 
quent almost  certain  neglect  of  some  lines.  Then,  too,  no  sales- 
man can  be  expected  to  present  each  one  of  a  great  variety  of 
lines  with  the  same  degree  of  intelligence.  Again,  the  salesman 
may  have  fallen  into  the  natural  and  human  mistake  of  neglect- 
ing goods  hard  to  sell  in  favor  of  lines  which  sold  easily  and  in 
large  volume.  Certain  it  is  that  there  are  very  few  indeed  per- 
manently successful  efforts  in  the  way  of  combination  traveling 
salesmen  that  can  be  pointed  out  to-day. 

These  schemes  have  been  tried  scores  and  hundreds  of  times 


180  PRACTICAL  EXPORTING 

in  the  course  of  the  last  forty  or  fifty  years.  Seldom  has  one 
lasted  more  than  a  year  or  two.  Men  make  such  combinations, 
go  abroad,  work  hard,  find  success  in  some  lines,  disappointment 
in  others.  At  the  end  of  a  year,  often  earlier,  if  they  can, 
members  of  the  combination  who  are  dissatisfied  with  the  results 
drop  out  and  their  places  must  be  filled,  if  the  salesman  is  to 
continue  for  another  year.  This  involves  loss  of  time,  for  it  is 
always  difficult  to  find  the  manufacturer  who  just  fits  in  to  the 
vacant  place  and  who  is  at  the  same  time  interested  in  the 
proposition.  Weeks  and  months  are  thus  wasted.  Ultimate 
dissatisfaction  of  everybody  concerned  has  hitherto  been  the  rule 
and  there  seem  to  be  no  good  grounds  for  anticipating  any  other 
results  in  the  future.  Most  prominent  manufacturers  are  thor- 
oughly familiar  with  this  sort  of  proposition,  many  of  them  have 
had  actual  experiences  with  similar  schemes.  As  a  rule  such 
manufacturers  are  not  disposed  to  listen  attentively  to  new  pro- 
posals of  similar  character. 

How  Combinations  May  Be  Successful. — Although  the  his- 
tory of  combination  traveling  salesmen  has  been  almost  uniformly 
discouraging,  it  may  be  that  a  successful  effort  of  this  sort  can  be 
developed.  Incidentally,  it  is  to  be  remarked  that  other  coun- 
tries than  the  United  States  have  had  precisely  similar  experi- 
ences to  ours.  AVe  can  by  no  means  claim  this  sort  of  effort  as 
one  of  our  own  devising.  In  all  cases  the  prime  cause  for  failure 
seems,  on  analysis,  to  have  been  the  fact  that  these  combinations 
have  been  proposed  and  carried  out  on  the  initiative  of  the  sales- 
men. They  have  not  been  originated  by  manufacturers.  Rea- 
sons for  making  up  combinations  of  unsatisfactory  nature  by 
the  salesmen  have  just  been  suggested.  If  manufacturers  on 
their  own  initiative,  instead  of  acquiescing  in  chance  proposals 
made  to  them,  were  themselves  to  engineer  combinations  satis- 
factory to  them  in  nature  and  to  carry  them  out  along  lines  dic- 
tated by  them,  instead  of  entrusting  their  development  to  the 
whims  or  schemes  of  salesmen  who  are  virtually  their  own  mas- 
ters, then  it  might  be  that  a  combination  effort  would  be  highly 
successful  and  satisfactor3\ 

This  sort  of  effort  should,  it  would  seem,  proceed  in  much  the 
following  fashion  :  Three  or  four,  or  eight  or  ten,  manufacturers 
of  similar  and  allied  goods,  meeting  at  conventions  or  simply 


TRAVELING  SALESMEN  ABROAD  181 

arranging  among  themselves  in  conferences,  may  agree  that  cer- 
tain foreign  territories  are  tempting  markets  which  ought  to  be 
developed  by  salesmen,  that  each  of  them  is  willing  to  spend  a 
certain  number  of  hundred  or  thousand  dollars  a  year  to  culti- 
vate these  markets.  They  may  agree,  therefore,  to  seek  out  and 
hire  on  fixed  salary  the  best  salesmen  they  can  select.  That 
salesman,  possessing  as  many  of  the  desirable  qualities  as  possi- 
ble and  having  had  a  thorough  experience  in  the  branch  of  in- 
dustry to  which  the  interested  manufacturers  belong,  should 
spend  a  number  of  weeks  at  each  of  the  factories  which  are  in- 
volved in  the  proposed  combination,  acquiring  a  general  knowl- 
edge of  each  individual  line,  and  receiving  lessons  from  each 
manufacturer  as  to  his  policies  and  expectations.  In  that  sales- 
man's hands  would  be  placed  representative  sample  collections  of 
each  of  the  manufacturers  engaged  in  the  combination.  If  some 
of  them  make  certain  articles  competing  with  others,  then  those 
of  all  but  one  maker  should  be  eliminated,  in  some  cases  equiva- 
lent offsetting  advantages  being  offered  by  those  manufacturers 
who  are  favored  in  such  a  selection.  The  aim  should  be  to  give 
the  salesman  a  representative  line  of  the  strongest  products  of 
each  of  the  factories  he  represents,  making  a  complete  whole  that 
will,  as  a  whole,  result  most  effectively  in  producing  business 
abroad. 

"We  have  here,  however,  to  encounter  the  element  of  trade  jeal- 
ousy, and  probably  to  combat  the  efforts  of  one  factory  involved 
to  domineer  over  the  others,  to  ' '  boss  the  show. ' '  If  there  is  to  be 
one  predominating  influence  in  the  combination,  it  is  doubtful 
if  the  others  will  get  their  share  of  attention  or  resulting  trade. 
Yet  it  is  certainly  highly  desirable  that  there  be  a  clearing  house, 
a  center  of  some  description  for  the  combination.  Instructions 
must  be  given  the  traveling  salesman  by  somebody  and  cannot 
always  be  given  by  majority  vote  of  the  several  manufacturers 
concerned.  The  clearing  house  is  especially  necessary  when  it 
comes  to  shipping  the  goods.  All  orders  taken  for  the  combina- 
tion from  one  and  the  same  customer  ought  to  be  shipped  on  one 
bill  of  lading,  if  not  invoiced  and  financed  as  a  whole.  To  some 
extent  these  requirements  can  be  met  by  utilizing  the  services 
of  foreign  freight  forwarders,  whose  province  and  operations  we 
shall  later  inquire  into.     Or  arrangements  can  be  made  with  ex- 


182  PRACTICAL  EXPORTING 

port  commission  houses  to  confirm  orders,  ship  and  finance  them. 
The  one  great  obstacle  to  such  a  combination  as  here  proposed 
would  seem  to  be  the  human  element.  The  generous  spirit  of 
give  and  take,  cooperation  for  the  benefit  of  all  with  possible  oc- 
casional detriment  to  some  even  if  only  minor  interests  of  the 
individual,  is  perhaps  rarely  to  be  found  among  manufacturers, 
each  fighting  aggressively  for  the  advancement  of  his  own  inter- 
ests. Something  of  this  sort  may  be  developed  on  satisfactory 
and  permanent  lines,  perhaps  through  pooling  profits,  but  the 
author  confesses  that  he  is  not  optimistic  in  this  regard. 

PREPARATIONS  FOR  FOREIGN  TRAVELING 

Before  a  salesman,  whether  representing  an  individual  manu- 
facturer or  a  combination  of  several  manufacturers,  sets  out  on  a 
foreign  trip  it  is  essential  that  other  preparations  be  made  than 
merely  the  collecting  of  a  set  of  samples  and  their  study.  Es- 
pecially in  the  case  of  a  first  trip  to  a  given  territory  it  is  neces- 
sary, curious  as  it  may  seem,  to  caution  the  traveler  that  before 
sailing  he  must  learn  just  as  much  as  he  can  about  the  countries 
he  is  to  visit  and  the  possible  customers  there  for  the  goods  he 
has  to  sell.  Moreover,  too  little  attention  is  often  paid  to  the 
necessity  of  starting  out  fully  armed  with  other  papers  than  the 
indispensable  letter  of  credit. 

Travelers'  Letters  of  Credit. — The  letter  of  credit,  or  other 
form  of  carrying  money  in  ample  amount  to  meet  every  expected 
expense  or  possible  contingency,  is  naturally  the  salesman's  first 
care.  Undoubtedly  a  banker's  circular  letter  of  credit  is  the 
most  generally  satisfactory  as  well  as  economical  way  of  carrying 
funds,  especially  in  fields  where  the  salesman  is  not  personally 
acquainted  and  cannot  depend  upon  getting  money  from  friends 
and  customers  through  drawing  drafts  on  his  house  or  otherwise. 
The  letter  of  credit  has  some  advantages  also  for  the  salesman's 
principals,  the  manufacturers,  in  that  as  a  rule  it  is  not  necessary 
for  them  to  advance  in  cash  the  full  amount  represented  by  the 
face  value  of  the  letter  of  credit.  The  manufacturer's  bankers 
usually  issue  these  letters  against  the  manufacturer's  rating  or 
credit  with  them,  charging  the  individual  amounts  to  the  manu- 
facturer one  by  one  as  the  salesman  draws  them  at  various  places 
and  dates  in  the  course  of  his  journeys.     The  so-called  ''checks," 


TRAVELING  SALESMEN  ABROAD  183 

issued  by  express  companies  and  some  other  institutions,  are  con- 
venient in  many  respects  but  usually  they  must  be  paid  for  in  full 
in  advance  and  the  rate  of  exchange  is  a  trifle  higher  than  that 
charged  when  drafts  are  drawn  against  circular  letters  of  credit. 
In  traveling  in  South  America  salesmen  have  often,  before  the 
war,  found  it  advantageous  to  carry  two  letters  of  credit,  one  in 
dollars,  the  other  in  pounds  sterling,  drawing  on  New  York  or 
London  as  temporary  rates  of  exchange  made  profitable.  In  very 
long  trips  considerable  savings  are  said  to  have  been  made. 

Passports. — The  passport  should  never  be  neglected,  referring 
to  conditions  as  they  exist  in  ordinary  times  the  world  over 
whether  a  state  of  war  prevails  in  a  given  country  or  otherwise. 
A  salesman  may  make  half  a  dozen  trips  and  never  have  occa- 
sion to  use  a  passport,  but  on  another  trip  there  may  unexpect- 
edl}^  arise  a  crisis  of  some  sort  which  will  make  the  possession 
of  that  document  vital.  It  should,  therefore,  always  be  carried 
no  matter  if  the  salesman  does  not  anticipate  visiting  certain 
countries  where  it  is  practically  always  necessary. 

Other  documents  are  necessary  in  the  case  of  some  countries, 
for  example,  in  Venezuela,  where  (officially)  a  certificate  of  re- 
cent vaccination  is  required  and  a  certified  baggage  list.  These 
papers  are  sometimes  demanded  and  sometimes  overlooked.  They 
should  always  be  in  the  traveler's  possession  and  he  should  in 
no  case  neglect  any  formality  which  the  laws  of  the  country  which 
he  is  about  to  visit  require,  including  the  consular  visa  before 
approaching  the  frontier  or  ports  of  certain  countries. 

Travelers'  Credentials  of  Authority. — Credentials  from  the 
firm  or  firms  represented  by  the  salesman  are  very  generally  for- 
gotten or  disregarded,  yet  they  form  what  may  on  occasion  be  an 
absolutely  indispensable  part  of  the  salesman's  equipment. 
Usually  a  Power  of  Attorney  should  be  supplied.  If  preferred, 
a  certificate  may  be  given  reading  perhaps  in  the  following  form : 

"We of  the  city  of hereby  certify  that  Mr. 

is  our  representative  for  {names  of  countries)  wnth  instruc- 
tions from  us  to  take  orders,  show  samples,  etc.,  {inserting,  if 
desired,  specific  definition  and  limitation  of  authority  granted) 
and  generally  guard  our  interests.  {Signature  of  the  firm.)^' 
The  signature  to  such  a  certificate  should  be  attested  by  a  notary 
public  and  his  signature  vised  by  suitable  consuls  or  possibly 


184  PRACTICAL  EXPORTING 

Ministers  or  Ambassadors  representing  the  countries  to  be  visited 
who  may  require  County  Clerk's  and  state  officials'  signatures, 
even  the  attestation  of  the  Secretary  of  State  of  the  United  States. 
This  certification  of  identity  and  general  status,  backed  by  a 
passport,  is  frequently  of  extreme  importance.  A  Power  of  At- 
torney when  given  should  also  be  fully  attested  in  the  same  way. 

Other  Helpful  Documents. — In  addition  it  will  do  no  harm 
at  all  and  may  occasionally  be  important  for  the  traveler  to  carry 
with  him  a  certificate  from  the  Chamber  of  Commerce  of  his  home 
town,  that  is,  the  town  where  the  factory  or  headquarters  of  his 
firm  is  located,  setting  forth  under  the  biggest  official  seal  of  the 
Chamber  of  Commerce,  and  in  as  imposing  and  formal  a  fashion 
as  possible,  the  fact  that  the  firm  represented  is  actually  estab- 
lished in  that  city  and  doing  business  there  and  that  the  sales- 
man is  its  authorized  representative.  Such  certificates  also  may 
be  duly  attested  hy^  consuls  of  the  several  countries  which  it  is 
planned  to  visit.  They  help  sometimes  in  very  effective  ways. 
Some  Governments  require  evidence  that  the  firm  said  to  be  rep- 
resented is  actually  and  legitimately  in  business. 

Helpful,  too,  on  occasion  may  be  official  letters  to  our  consular 
and  diplomatic  representatives  which  many  travelers  are  dis- 
posed to  ridicule.  For  example,  if  the  traveling  man  encounters 
opportunities  of  undertaking  important  negotiations  with  rail- 
ways or  with  municipal  or  government  departments,  he  may  find 
that  unless  he  is  amply  fortified  by  documents  positively  con- 
firming his  pretensions  to  be  the  representative  of  the  house 
which  he  claims  to  represent,  he  will  not  be  permitted  to  tender 
for  supplies  required  or  be  otherwise  recognized. 

Letters  of  Introduction. — Letters  of  introduction  as  they 
are  usually  solicited  and  given  are  of  little  if  any  value  and  may 
just  as  well  be  left  at  home.  Introductions  to  large  commercial 
houses  or  local  officials  abroad,  of  importance  and  influence,  may 
be  helpful  but  only  when  they  come  from  actual  and  intimate 
friends  in  the  United  States.  Such  letters  given  by  casual  ac- 
quaintances, or  persons  who  merely  think  they  remember  having 
met  the  people  abroad,  are  worse  than  useless.  When  given  by 
people  having  real  influence  with  those  to  whom  they  are  ad- 
dressed, these  letters  may  be  of  great  assistance,  especially  as 


TRAVELING  SALESMEN  ABROAD  185 

further  fortifying  the  traveler's  claims  to  be  the  representative 
of  an  important  American  firm. 

Introduction  to  Foreign  Bankers. — Letters  from  American 
bankers  to  their  corresponding  bankers  in  foreign  countries  to 
be  visited  should  never  be  neglected.  While  usually  it  is  possible 
for  the  traveling  man  readily  to  secure  an  interview  with  bankers 
in  almost  any  city  in  the  world  without  any  introduction  what- 
soever beyond  his  business  card,  yet  letters  from  American 
bankers  asking  their  foreign  correspondents  to  give  i\Ir.  So-and- 
So,  representing  such-and-such  a  firm,  any  information  that  he 
may  require,  are  always  a  help  and  in  some  cases,  especially  in 
British  colonies,  Australasia,  South  Africa,  etc.,  may  be  neces- 
sary. One  of  the  peculiarities  of  some  British  colonial  bankers 
is  a  refusal  to  give  information  unless  bankers  in  his  home  coun- 
try have  introduced  the  applicant  and  specifically  requested  the 
privilege  of  such  information.  These  bankers'  letters  of  intro- 
duction, it  should  be  understood,  are  absolutely  distinct  from 
circular  letters  of  credit.  They  are  not  to  be  addressed  by  one 's 
local  bank  but  should  be  secured  by  the  local  banker  from  the 
New  York  branches  of  foreign  bankers,  or  from  those  interna- 
tional bankers  in  New  York  who  are  the  usual  correspondents 
in  this  country  of  the  foreign  bankers  to  whom  letters  will  be 
addressed.  In  some  cases  circular  letters  of  introduction  will 
be  given,  good  at  all  of  the*  numerous  branches  in  a  given  terri- 
tory of  a  certain  foreign  banker. 

Papers  Identifying  Samples. — Other  documents  which  the 
foreign  traveling  man  will  do  well  to  provide,  when  he  is  carrying 
samples  on  which  duties  will  be  imposed  by  the  various  coun- 
tries that  are  visited,  include  the  requisite  number  of  formal 
sample  invoices,  when  necessary  duly  attested,  and  always  the 
traveler  should  be  armed  with  an  account  of  the  actual  numbers 
of  the  samples  and  very  especially  their  exact  gross  and  net 
weights.  With  such  information  he  can  often  avoid  a  good  deal 
of  red  tape  and  annoyance  in  foreign  custom  houses. 

Knowing  the  Trade. — Tf  the  traveling  man,  or  the  house  he 
represents,  has  never  done  any  actual  business  in  the  market 
which  he  is  to  visit,  it  is  none  the  less  desirable  in  the  highest 
degree,  if  not  positively  essential,  that  before  he  leaves  the  United 


186  PRACTICAL  EXPORTING 

States  he  should  have  the  best  possible  paper  acquaintance  with 
the  personnel  of  the  field  which  he  proposes  to  cultivate.  He 
should  have,  and  he  will  find  it  comparatively  easy  to  secure,  a 
pretty  good  list  of  all  the  people  of  any  importance  engaged  in 
the  line  of  business  which  interests  him  in  each  city  that  he 
intends  to  visit.  He  should  know  something  about  the  compar- 
ative importance  of  these  various  prospects  and  he  should  have 
made  up  his  mind  which  ones  among  them  seem  to  be  most  de- 
sirable as  customers  or  agents,  that  is,  those  with  whom  he  expects 
to  work  especially  hard.  True,  on  arrival  in  a  strange  field  and 
looking  over  the  trade,  the  traveler  may  revise  his  ideas  in  these 
regards,  but  to  go  to  a  field  without  having  any  idea  even  as  to 
the  names  of  the  business  houses  established  there  is  certainly 
supremely  ridiculous,  involving  regrettable  loss  of  time.^ 

MAPPING  ROUTES 

When  a  traveling  man  sets  out  to  visit  certain  foreign  markets 
for  the  purpose  of  developing  trade  there,  he  should  usually  make 
up  his  mind  to  spend  as  much  time  in  each  market  as  circum- 
stances seem  to  require.  Having  undertaken  the  initial  expenses 
to  reach  a  market  it  is  usually  the  best  policy  to  stay  there  as 
long  as  seems  necessary  in  order  to  get  the  utmost  possible  out  of 
it,  rather  than  to  cut  one's  visit  short  in  order  to  carry  out 
some  pre-arranged  itinerary,  possibly  leaving  behind  one  better 
opportunities  than  markets  farther  on  can  offer.  Of  course,  the 
traveler  must  make  up  some  sort  of  a  schedule  before  he  starts 
on  his  trip,  but  the  time  allowance  must  be  elastic  as  well  as  lib- 
eral.    Departure   and   arrival   of   steamers    are   often   variable 

1  Professor  Cherington,  of  the  Harvard  Graduate  School  of  Business  Ad- 
ministration, telling  of  the  operations  of  a  suceessful  American  salesman 
in  Latin  America,  writes:  "Wliat  did  this  observing  exception  to  so  many 
rules  do  about  the  moot  question  of  credits?  Did  he  pick  up  anybody  with 
a  sign  over  his  door  and  tell  him  to  take  all  the  goods  he  would  and  pay 
for  tlieni  in  notes  maturing  at  six-year  intervals,  just  for  the  sake  of  get- 
ting trade  started?  He  did  not.  In  his  crude,  untutored  way  he  found 
out  wlio  was  doing  the  trade  in  the  lines  he  carried ;  from  these  he  chose 
the  ones  to  whom  he  wanted  to  sell  and  then  he  looked  into  their  financial 
standing  before  they  knew  he  was  on  earth.  Then  when  he  sold  them  goods 
he  already  knew  they  could  pay  for  them  in  00  days  as  well  as  in  90  years 
and  he  never  varied  his  terms."  A  good  deal  of  information  of  this  sort 
and  a  tentative  selection  of  customers  can  be  made  before  ever  the  traveling 
man  sets  sail  from  the  United  States. 


TRAVELING  SALESMEN  ABROAD  187 

dates.  Excepting  in  a  few  of  the  big  express  passenger  lines, 
many  steamers  which  the  traveler  must  employ  in  various  parts 
of  the  world  come  and  go  at  their  own  sweet  will,  which  means 
as  cargo  demands  at  sundry  ports  make  to  their  advantage.  It 
is  quite  possible  on  account  of  the  vagaries  of  some  steamship 
sailings  for  one  to  miss  anticipated  connections  and  be  held  up 
unexpectedly  for  a  week  or  two  weeks  awaiting  other  opportuni- 
ties of  sailing  to  new  markets.  On  this  account,  too,  changes  in 
the  traveler's  itinerary  as  first  planned  are  often  required. 

The  foreign  traveling  man's  principals  cannot  hold  him  down 
to  a  day  by  day  schedule,  as  very  likely  they  do  their  domestic 
salesmen.  Routes  as  well  as  dates  have  to  be  changed  by  the 
salesman  on  his  own  responsibility,  as  circumstances  or  local  con- 
ditions encountered  seem  to  him  to  make  desirable  if  not  un- 
avoidable, sometimes  by  quarantine,  for  example.  Places  which 
on  the  map  look  close  to  other  points  which  the  foreign  traveler 
is  to  visit  .may  actuall}^  involve  five  or  ten  days'  travel.  Islands 
in  the  West  Indies,  for  example,  which  seem  to  lie  close  to- 
getlier  may  yet  be  as  widely  separated  as  New  York  and  Liver- 
pool so  far  as  means  of  communication  are  concerned. 

LIFE  ABROAD  "ON  THE  ROAD  ' 

In  every  aspect  of  his  life  abroad  the  traveling  salesman  will 
find  striking  variations  from  his  home  experiences.  From  rail- 
way cars  to  hours  for  doing  business — almost  everything  will  be 
new  and  strange  to  the  American  who  finds  himself  abroad  for 
the  first  time.  Moreover,  the  life  of  the  traveling  salesman 
abroad  will  differ  in  some  notable  respects  from  the  routine  of 
the  pleasure  tourist.  Again,  practice  and  routine  in  one  coun- 
try are  no  guide  to  what  may  be  expected  in  another,  even  in  a 
closely  neighboring  country.  Here  once  more  we  are  impressed 
with  the  necessity  of  versatility  and  adaptability  in  the  foreign 
traveling  man.  In  some  foreign  markets  he  will  visit  he  will  find 
it  possible  to  "hustle,"  though  seldom  if  ever  to  the  extent  which 
his  American  training  inclines  him  to  attempt.  On  the  other 
hand,  whether  he  wishes  to  do  so  or  not,  he  will  find  it  unavoid- 
able to  take  life  easy  in  the  tropics.  There  he  cannot  hustle  no 
matter  how  much  he  wishes  to,  nor  would  it  be  desirable  for  him 
to  try,  for  he  would  quickly  wear  himself  out.     The  man  who 


188  PRACTICAL  EXPORTING 

has  never  traveled  abroad  will  find  valuable  preliminary  infor- 
mation in  Baedeker's  and  other  guide  books.  The  following 
supplementary  hints  may  be  added. 

Foreign  Monetary  Systems. — It  is  important  the  traveling 
man  should  study  in  each  market  the  ruling  rates  of  foreign  ex- 
change, their  fluctuations  and  the  monetary  situation  in  general. 
He  must  know  something  about  these  things  for  his  own  protec- 
tion in  exchanging  the  money  of  one  country  for  the  money  of 
another,  but  he  should  be  well  posted  regarding  international 
exchanges,  the  gold  premium,  rates  on  paper,  and  in  general  re- 
gard to  financial  matters,  to  be  able  to  discuss  these  questions 
intelligently  with  his  customers  to  whom  they  are  matters  of 
daily  and  most  intense  interest. 

Baggage. — Of  course,  the  traveler  who  carries  large  collec- 
tions of  samples  cannot  avoid  the  use  of  trunks,  but  he  must  be 
prepared  to  denounce  them  rather  frequently  as  "an  infernal 
nuisance,"  and  his  patience  will  often  be  sorely  tried  by  vexa- 
tious delays  and  red  tape  to  which  he  will  in  consequence  be  sub- 
jected. The  rule  is  to  carry  small  hand  bags,  even  if  many  of 
them  are  necessary.  In  many  countries  there  is  absolutely  no 
free  allowance  for  luggage,  in  other  countries  the  allowance  is 
very  limited,  and  in  addition  there  are  in  general  few  facilities 
for  handling  big  or  heavy  luggage.  Trunks  prepared  for  for- 
eign traveling  should  never  be  the  large,  heavy  cases  that  Amer- 
ican traveling  men  use  at  home.  Lightness  and  ease  in  handling 
are  highly  desirable.  With  only  rare  exceptions,  the  American 
traveling  man  should  patronize  the  first  class  accommodations  on 
railways  as  well  as  steamers. 

Sample  Rooms. — The  traveling  man  who  carries  samples  in 
Europe  will  usually  have  to  patronize  special  hotels,  that  is  com- 
mercial houses,  rather  than  the  hotels  frequented  by  tourists. 
The  latter  rarely  have  any  sample  rooms  or  as  the  English  call 
them  "stock  rooms."  Some  of  them  refuse  to  receive  "com- 
mercial men."  Indeed,  in  other  parts  of  the  world,  in  many 
eases  throughout  Latin  America  as  well  as  in  the  Orient,  Aus- 
tralia and  South  Africa,  the  traveler  must  hire  special  sample 
rooms  outside  of  hotels  or  sometimes  lease  a  small  shop  that  may 
chance  to  be  vacant. 

Hours  of  Business. — As  a  rule  office  hours  in  foreign  business 


TRAVELING  SALESMEN  ABROAD  189 

establishments  are  longer  than  those  customary  in  the  United 
States,  beginning  earlier  in  the  morning  and  ending  later  in  the 
evening.  There  are  almost  invariably,  however,  interruptions 
to  the  business  day  which  we  do  not  tolerate  in  our  more  strenu- 
ous life.  In  England  and  the  British  Colonies  everywhere  office 
routine  is  interrupted  by  the  serving  of  afternoon  tea  at  four  or 
five  o'clock  and  the  American  visitor  will  at  first  be  quite  non- 
plussed by  finding  his  customer  putting  aside  business  at  such 
an  hour,  sipping  his  tea  and  eating  his  toast  or  cakes  while  he 
gossips  of  anything  else  than  business  for  half  an  hour  or  so. 
In  the  Germanic  countries  the  day  is  broken  up  by  several  meals, 
almost  always  by  coffee  at  nine,  by  dinner  at  eleven  or  twelve 
and  by  ' '  cakes ' '  at  four  or  four-thirty. 

In  southern  Europe  and  in  many  parts  of  Latin  America  the 
noon  recess  lasts  from  eleven  or  twelve  o'clock  in  the  morning 
until  two  or  three  o'clock  in  the  afternoon  and  in  many  hot 
countries  advantage  is  taken  of  the  cool  hours  of  the  morning 
to  start  business  as  early  as  six  o'clock,  and,  to  compensate  for 
the  time  taken  from  business  during  the  hot  midday  hours, 
work  is  extended  until  eight  or  nine  o'clock  in  the  evening.  On 
the  other  hand,  peculiar  local  customs  exist  at  some  points,  as 
for  example  in  Jamaica  where  all  business  houses  are  tightly 
closed  at  four  o'clock  in  the  afternoon.  As  a  rule  the  Saturday 
half-holiday,  almost  universal  in  the  United  States  and  usual 
also  in  Great  Britain  and  in  some  British  Colonies,  has  not  been 
adopted  to  anything  like  the  same  extent  in  other  countries.  In 
New  Zealand  cities  have  local  option  in  this  respect — Wednesday, 
or  some  other  day,  is  a  half-holiday  instead  of  Saturday  in  some 
of  them. 

It  is  usually  possible  for  the  traveling  man  to  call  on  his  cus- 
tomers much  earlier  in  the  day  than  he  would  think  advisable  in 
the  United  States.  In  England  he  will  probably  follow  much 
tlie  same  rules  as  here  at  home,  but  elsewhere  a  nine  o'clock  call 
will  be  preferred  to  one  from  eleven  to  twelve.  In  fact,  the 
morning  hours  are  those  most  desirable  for  office  or  shop  visits 
and  advantage  can  be  taken  of  the  afternoon  hours  for  cafe  and 
club  conferences  with  business  acquaintances  and  friends. 

Custom  Houses. — Common  politeness  coupled  with  an  inex- 
haustible supply  of  patience  will  usually  see  the  traveling  man 


190  PRACTICAL  EXPORTING 

comfortably  through  almost  any  foreign  custom  house.  It  is 
rarely  that  a  man  who  takes  the  right  attitude  toward  officials 
experiences  any  difficulty  whatever.  However,  this  is  one  of 
the  annoyances  inseparable  from  foreign  traveling.  At  each 
frontier  that  is  crossed  there  is  the  inevitable  custom  house  with 
its  routine  and  formalities  which  have  to  be  complied  with. 
The  traveling  man  who  carries  samples  will  need  all  the  tact  and 
tolerance  he  can  command.  If,  however,  he  has  not  a  large  col- 
lection of  samples  or  only  a  few  articles  which  may  pass  as 
ordinary  tourist's  luggage,  then  he  may  manage  almost  anywhere 
with  little  difficulty  or  delay.  There  are  few  if  any  custom 
houses  of  any  country  of  the  world  where  the  inquisition  prac- 
ticed in  American  custom  houses  is  even  remotely  approximated, 
except  in  times  of  war.  It  should  be  noted,  however,  that  in 
some  countries  the  typewriter  or  the  photographic  camera  which 
the  salesman  may  be  carrying  will  be  taxed,  and  always  there  is 
trouble  if  a  large  quantity  of  tobacco  or  cigars  is  included  in  the 
traveler's  baggage. 

Approximate  Average  Expenses. — If  one  were  to  attempt  a 
guess  at  what  may  be  the  general  average  expenses  of  a  foreign 
traveling  man  in  the  course  of  an  extended  trip,  say  of  not  less 
than  four  months'  duration,  it  would  probably  be  from  $18  to 
$25  a  day  from  New  York  back  to  New  York,  including  steam- 
ship fares  and  everything  else.  Such  an  allowance  is  ample  for 
the  ordinary  traveler  who  does  not  carry  samples,  or  have  many 
and  costly  cablegrams  to  send,  and  would  cover  a  trip  around 
the  world  as  well  as  a  trip  to  the  West  Indies.  Everything, 
however,  depends  upon  the  individual  and  the  errand  on  which 
he  is  bound.  If  the  traveler  has  to  do  a  great  deal  of  entertain- 
ing, particularly  if  that  entertaining  is  of  prospects  of  high 
position,  demanding  every  available  luxury,  then  his  expenses 
will  be  correspondingly  larger  than  a  more  modest  man's.  The 
traveler  who  carries  an  assortment  of  ten  or  twelve  trunks  full 
of  samples  will  be  subjected  to  greatly  increased  expense  which 
will  often  include  the  payment  of  heavy  duties  on  these  samples 
in  each  country  that  he  visits  and  even  the  employment  of  serv- 
ants to  pack,  unpack  and  handle  the  samples.  In  India  and 
throughout  the  Far  East  it  is  a  customary  thing  to  carry  with 
one  a  native  personal  servant.     His  cost  is  insignificant. 


TRAVELING  SALESMEN  ABROAD  191 


DUTIES  ON  SAMPLES 

How  to  maneuver  his  samples  through  foreign  custom  houses 
is  always  a  serious  and  perplexing  problem  which  each  traveling 
man  will  have  to  solve  for  himself.  It  may  be  remarked  in  the 
first  place  that  if  the  traveler  takes  samples  away  from  the 
United  States  with  the  expectation  of  bringing  them  back  again 
into  this  country  it  will  be  well  for  him  to  secure  some  proof  of 
their  American  origin  and  exportation  from  one  of  our  ports. 
If  his  sample  trunks  are  taken  as  passenger's  baggage  by  the 
same  steamship  by  which  the  traveler  himself  sails;  then  certifi- 
cates to  this  effect  with  name  of  steamer  and  sailing  date  may 
be  obtained,  while  if  the  trunks  are  shipped  as  freight,  then  it  is 
possible  to  have  a  duplicate  of  the  bill  of  lading  and  the  goods 
will  have  been  cleared  at  the  custom  house  in  the  usual  fashion. 
If  some  such  evidence  of  actual  shipment  of  the  samples  out  of 
the  United  States  is  not  in  the  traveler 's  hands  or  available  when 
he  returns  to  this  country,  he  may  experience  some  delay  if  not 
annoying  cross  examination  by  our  custom  house  officials  before 
they  will  allow  samples  of  American  goods  free  entry  to  their 
own  home. 

Foreign  Duties  Must  Be  Paid. — It  may  sometimes  be  possible 
for  a  traveling  man  to  pass  one  or  two  samples  of  apparently 
insignificant  value  or  importance  through  the  custom  houses  of 
the  various  countries  he  visits  without  trouble  or  expense.  If, 
however,  he  has  with  him  a  sufficient  quantity  of  samples  to  be 
noticeable,  then  he  will  find  in  each  and  every  instance  that  he 
must  make  some  arrangements  with  the  several  custom  houses 
for  the  duties  which  will  be  assessed  on  these  samples.  Of 
course,  this  applies  to  samples  which  have  any  value  whatsoever. 
Possibly  small  cuttings  of  cotton  textiles,  for  example,  if  not  of 
sufficient  size  to  have  any  marketable  value,  even  the  smallest, 
might  be  exempt,  but  even  this  would  be  doubtful  in  many  coun- 
tries. As  has  already  been  suggested,  the  traveling  man  should 
be  provided  with  accurate  invoices  covering  all  the  samples  in 
his  collection  with  exact  weights  and  any  other  details  that  will 
be  of  assistance  in  facilitating  custom  house  operations.  Pos- 
sibly in  some  instances  he  might  be  able  to  pass  samples  on  such 
statements  without   actually   undergoing   an   examination.     In- 


192  PRACTICAL  EXPORTING 

voices,  when  carried,  should  be  so  arranged  that  specimen  sam- 
ples picked  out  at  random  by  custom  house  officials  as  a  test 
can  be  immediately  identified  from  the  invoice. 

Duties,  when  assessed,  as  they  will  almost  invariably  be,  must 
be  paid  in  cash,  or  a  bond  may  be  arranged  to  cover  the  amount 
of  duties  pending  re-export  from  the  country  when  the  traveling 
man  leaves  for  fresh  fields.  Again,  duties  paid  in  cash  may  be 
refunded  in  many  countries,  in  whole  or  less  a  small  discount, 
when  the  traveler  takes  the  goods  away  with  him.  Such  ar- 
rangements, however,  almost  always  involve  the  mutilation  of 
the  samples,  either  with  the  express  purpose  of  preventing  their 
sale,  or  with  the  nominal  purpose  of  identifying  them  for  ex- 
amination when  refund  of  duties  is  claimed.  Holes  may  be 
punched  in  them,  seals  affixed,  rubber  stamps  impressed,  and 
the  traveler  who  attempts  thus  to  get  back  the  money  paid  for 
duties  in  several  countries  is  apt  to  wind  up  with  a  lot  of  sam- 
ples curiously  decorated  which  are  no  longer  most  effective  as 
tools  for  getting  orders. 

How  Duties  May  Be  Recouped. — When  an  effort  is  decided 
upon  to  obtain  the  refund  of  duties  paid  on  samples,  suitable 
certificates  will,  of  course,  be  demanded  in  the  first  instance, 
which  must  be  surrendered  when  the  goods  are  re-exported. 
Notice  in  advance  of  date  of  re-exportation  must  be  given  and 
possibly  two  or  three  days  wasted  on  this  account.  Similar  de- 
lay and  annoyance  may  be  involved  in  case  it  is  desired  to  have 
a  bond  covering  the  duties  canceled.  On  this  and  on  other  ac- 
counts many  foreign  traveling  men  prefer  simply  to  pay  the 
duties  that  are  demanded  and  forget  all  about  them. 

Others,  however,  plan  to  sell  their  samples  in  each  market  they 
visit,  having  fresh  assortments  sent  in  advance  to  each  new  suc- 
ceeding market  which  it  is  planned  to  visit.  Thus,  the  travel- 
ing man  taking  his  samples  into  Brazil  will  pay  duties  in  the 
usual  course,  use  the  samples  for  soliciting  orders  and,  when  he 
is  finished  with  the  Brazilian  market,  dispose  of  them  for  the 
best  prices  he  can  obtain  and  go  on  unincumbered  to  Argentina, 
perhaps,  where  he  will  find  awaiting  him  a  shipment  of  duplicate 
samples  from  his  factory.  In  Argentina  a  similar  course  will 
be  pursued  as  in  any  other  markets  afterAvard  to  be  drummed. 
Obviously,  careful  calculation  must  be  made  by  the  factory  in 


TRAVELING  SALESMEN  ABROAD  193 

order  to  ensure  getting  fresh  supplies  of  samples  into  the  sales- 
man's hands  at  about  the  time  that  he  expects  to  arrive  in  each 
new  market.  A  delay  of  two  or  three  weeks  while  the  salesman 
is  awaiting  samples,  or  clearing  them  at  custom  house,  may  be 
rather  expensive.  On  the  other  hand,  if  the  samples  are  sent 
far  in  advance  there  may  be  considerable  charges  for  storage  ac- 
cumulating. In  every  such  case  care  must,  of  course,  be  taken 
that  the  traveling  man  be  put  in  possession  of  bills  of  lading, 
invoices  and  other  documents  necessary  to  enable  him  promptly 
to  get  possession  of  the  goods  and  have  them  cleared  through  the 
custom  house. 

SALESMEN'S  LICENSES 

In  visiting  a  good  many  foreign  countries  the  inexperienced 
traveler  will  be  unpleasantly  surprised,  if  he  has  not  prepared 
himself  in  advance,  at  being  confronted  with  the  requirement 
of  securing  a  license  before  he  is  permitted  to  do  business.  He 
will  be  even  more  annoyed  in  some  countries  by  the  amount  of 
the  fee  demanded  of  him  for  the  privilege  of  soliciting  orders. 
The  principle  involved  in  the  requirement  for  licenses  is,  nomi- 
nally, the  protection  of  local  salesmen.  They  are  supposed  to 
be  primarily  intended  to  apply  to  the  non-resident  traveler  who 
expects  to  solicit  business  in  competition  with  local  agents,  that 
is,  from  the  small  retail  trade  or  as  house-to-house  peddlers. 

What  Are  Licenses? — Licenses  are  not  intended  in  principle 
to  apply  to  the  foreign  traveling  man  who  comes  to  introduce 
foreign  made  goods  to  wholesale  houses  and  thus  stimulate  the 
business  of  such  local  merchants  and  their  native  representa- 
tives. At  least,  the  foreign  traveling  man  may  thus  argue  to 
himself  in  his  effort  to  escape  the  necessity  of  paying  a  lot  of 
money  for  the  licenses  that  are  demanded.  Such  licenses  are 
the  rule  rather  than  the  exception  in  all  European  countries  but 
almost  always  apply  to  the  house-to-house  peddler  only  and 
rarely  is  any  effort  made  to  impose  them  on  the  foreign  com- 
mercial traveler  of  the  description  we  are  now  contemplating. 

Where  Licenses  Are  Necessary. — The  very  real  necessity  for 
meeting  license  requirements  cannot  be  avoided,  however,  when 
the  salesmen  visit  South  Africa,  New  Zealand,^  and  almost  every 

1  In  New  Zealand  a  traveling  salesman  must  deposit  £10  on  arrival  as 


194  PRACTICAL  EXPORTING 

Latin  American  republic.  The  only  countries  in  all  Latin 
America  where  no  taxes  are  imposed  on  commercial  travelers 
are  Cuba,  Honduras,  Nicaragua  and  Venezuela.  The  head  of  a 
house  or  a  partner  in  an  establishment  going  to  a  foreign  market 
only  to  visit  one  or  two  established  customers  may  in  some  in- 
stances be  classified  as  a  commercial  traveler  and  may  run  the 
risk  of  a  fine  if  it  is  discovered  that  he  does  not  possess  the  neces- 
sary license.  Costs  may  range  as  high  as  several  thousand 
dollars  in  covering  the  different  states  and  municipalities  of  a 
single  country.  Clearly  enough,  therefore,  this  expense  is  to  be 
avoided  if  in  any  honorable  way  possible. 

To  Pay  or  not  to  Pay. — Usually  the  foreign  traveling  sales- 
man does  not  expect  to  carry  on  a  house-to-house  canvass  in  the 
market  which  he  is  visiting  and  hence  is  justified  in  feeling  that 
he  is  not  properly  subject  to  the  license  tax.  Unless,  however, 
he  has  made  adequate  arrangements  for  evading  this  liability 
he  may  find  himself  in  no  end  of  trouble.  Fines  which  are  im- 
posed upon  detection  of  efforts  to  dodge  these  taxes  are  often 
very  severe  in  some  countries,  particularly  in  Latin  America. 
Half  or  more  of  the  fine  that  is  imposed  is  given  as  a  reward  to 
informers.  Instances  have  been  known  where  a  customer,  after 
placing  a  legitimate  order  with  a  salesman,  has  then  proceeded 
to  the  police  and  laid  information  against  the  salesman.  In 
some  South  American  countries  spies  are  common  among  por- 
ters and  loafers  around  hotels. 

The  traveling  man  who  arrives  with  a  large  collection  of  sam- 
ples in  a  country  where  licenses  are  reciuired,  is  identified  as  a 
salesman  by  the  very  existence  of  those  samples.  It  may  happen 
in  some  eases  that  the  traveling  man  will  believe  it  desirable  to 
secure  local  licenses  in  every  market  he  visits,  either  because  of 
the  nature  of  the  business  which  he  expects  to  do,  or  because  it 
is  only  by  thus  establishing  his  identity  that  he  obtains  a  legal 
standing  in  court  and  can  in  consequence  enforce  the  fulfilment 
of  contracts  or  the  payment  of  indebtedness  by  process  of  law. 
In  by  far  the  greater  number  of  cases,  however,  it  is  the  sales- 
man's effort  to  escape  the  payment  of  this  sort  of  taxes. 

guaranty  for  payment  of  revenue  tax  on  profits.  When  lie  leaves  the  Do- 
minion ho  may  render  an  accoimt  of  sales  and  i)rofits  or  commissions  and 
any  balance  due  him  will  be  refunded,  or  additional  tax  levied. 


TRAVELING  SALESMEN  ABROAD  195 

How  to  Escape  Licenses.-»-Usually  this  is  accomplished  by 
working  in  conjunction  with  some  well  established  local  house 
which  has  already  secured  the  licenses  under  which  its  repre- 
sentatives work  in  the  local  markets.  If  the  traveler  who  visits 
a  market  for  the  first  time  has  no  established  customers  there,  or 
no  customers  occupying  the  position  of  agents  or  wholesalers, 
then  the  question  arises  as  to  what  connections  he  can  make  of 
the  proper  description  which  will  give  him  the  necessary  pro- 
tection. Here  is  one  advantage  in  the  right  sort  of  letters  of 
introduction  which  the  traveling  man  may  carry  with  him.  In- 
fluential letters  to  well  known  and  thoroughly  well-established 
agents  or  merchants  will  be  exceedingly  helpful  on  his  first 
arrival,  even  if  after  discussion  of  business  it  is  mutually  deter- 
mined that  permanent  business  relations  shall  not  follow.  In 
these  cases  the  visiting  salesman  is  technically  regarded  as  an 
employee  of  the  local  firm  with  which  he  is  working  and  is  thus 
exempt  from  taxation. 

Some  traveling  men,  preferring  not  to  be  betrayed  by  a  sample 
collection,  ship  their  trunks  as  freight  under  regular  bill  of  lad- 
ing by  the  same  steamers  by  which  they  themselves  travel  as 
ordinary  tourists.  On  arrival  at  port  of  destination  the  samples 
are  left  in  the  custom  house  along  with  the  other  cargo  of  the 
vessel  until  the  market  has  been  looked  over  and  at  least  tenta- 
tive arrangements  made  with  a  seemingly  desirable  connection 
for  the  development  together  of  local  opportunities,  always  of 
course  under  licenses  in  the  possession  of  such  local  connections. 
In  some  Latin  American  countries  this  may  involve  costly  de- 
lay. Samples  thus  shipped  as  freight  may  be  consigned  simply 
"to  order"  and  the  bill  of  lading  carried  by  the  salesman,  or 
they  may  be  shipped  to  some  reliable  custom  house  agent  who 
will  take  ctire  of  them  and  look  after  the  necessary  formalities 
while  the  salesman  himself  is  making  arrangements  for  repre- 
sentation. ]\Iany  salesmen,  however,  pay  no  attention  to  diffi- 
culties that  may  follow,  take  their  samples  along  as  personal  bag- 
gage and  simply  leave  them  in  the  custom  house  while  they  pro- 
ceed at  their  leisure  to  make  their  local  arrangements.  Actual 
experience  can  only  determine  what  is  each  salesman's  best 
policy. 


CHAPTER  VII 

ADVERTISING  TO  GET  EXPORT  TRADE 

The  Modern  Export  Trade  Paper  and  Its  Service  Department — 
Smidry  Export  Advertising  Propositions  and  Special  Export 
Editions — Local  Advertising  in  Foreign  Markets — The  Best 
Copy  for  Export  Announcements — Advertising  for  General 
Publicity  and  Prestige  Abroad — Results  from  Export  Adver- 
tising— Comment  and  Advice  as  to  Export  Catalogues. 

PRINCIPLES  of  the  desirability  and  value  of  advertising 
are  too  well  established  in  the  United  States  to  require 
discussion.  The  man  interested  in  foreign  markets  will 
do  well,  however,  to  note  the  fact  that  it  is  our  American  prac- 
tices which  set  the  pace  in  every  other  land.  It  is  American 
example  and  American  technique  in  advertising  which  are 
looked  up  to  in  foreign  countries.  It  is  our  models  which  are 
admired  and  accepted  by  all  the  world.  Advertising  to  get  ex- 
port trade  differs  from  no  other  in  the  general  acceptance  of  the 
principles  involved.  As  a  writer  dealing  with  export  advertis- 
ing in  ' '  Office  Appliances ' '  expressed  it  not  long  ago :  ' '  This  is 
practically  the  only  method  for  reaching  the  foreign  buyer 
direct  at  relatively  small  expense  and  it  has  been  the  means  by 
which  nearly  every  American  manufacturer  now  exporting  on 
a  large  scale  made  his  first  beginning.  A  few  houses  have  occa- 
sionally advertised  in  foreign  class  publications  with  benefit,  but 
the  great  majority  employ  one  or  all  of  the  export  journals  pub- 
lished in  the  United  States."  Of  all  the  means  available  for 
carrying  the  manufacturer's  message  to  foreign  prospects,  it  is 
the  export  trade  paper,  therefore,  which  requires  our  first  con- 
sideration. 

ADVERTISING  IN  THE  EXPORT  TRADE  PAPER 

The  export  trade  paper  is  by  no  means  a  new  thing  or  an 
American  idea.     Similar  media  exist  and  are  favorite  forms  of 

196 


ADVERTISING  TO  GET  EXPORT  TRADE         197 

advertising  in  most  of  the  European  manufacturing  countries. 
They  have  existed  in  the  United  States  for  forty  years  and 
more  and  there  is  no  mean  number  of  American  manufacturers 
who  have  used  their  columns  for  publicity  purposes  continuously 
for  from  ten  to  thirty  years  past.  Although  similar  papers  exist 
in  Europe,  yet  nowhere  else  has  this  kind  of  publication  been 
developed  as  in  the  United  States. 

What  Is  the  Export  Trade  Paper? — Popularly  classed  to- 
gether, there  is  a  variety  of  publications  listed  under  this  head 
which  ought  to  be  distinguished  in  the  minds  of  intending  ad- 
vertisers. There  is  the  trade  paper  appealing  to  importers  and 
merchants  dealing  in  foreign  goods  in  other  countries,  and  there 
are  class  and  popular  journals.  Take  as  examples  of  the  latter : 
papers  devoted  to  agriculture;  to  women's  interests  and  to  the 
home ;  to  general  news ;  and  add  the  house  organs  of  some  Amer- 
ican export  commission  houses.  The  man  studying  this  ques- 
tion, even  if  he  cannot  understand  the  languages  in  which  some 
of  these  papers  are  printed,  can  form  an  adequate  idea  of  their 
province  and  of  the  fields  covered  by  a  consideration  of  the 
character  of  articles  and  illustrations  which  are  published. 
Such  a  consideration  ought  to  dictate  the  class  of  advertise- 
ments or  the  kind  of  copy  which  legitimately  should  be  carried 
by  a  particular  journal. 

Intended  Exclusively  for  Foreign  Readers. — All  of  the  pa- 
pers in  question  are,  or  should  be,  solely  intended  for  foreign 
circulation,  not  for  circulation  in  the  United  States.  None  of 
them  have  any  considerable  number  of  paid  subscribers  in  this 
countr}'  ;  none  of  them  have  any  sale  on  the  news  stands ;  most 
of  them  are  known  to  American  manufacturers  chiefly  through 
appeals  for  advertising.  It  may  very  likely  be  largely  due  to 
this  fact  that,  in  years  gone  by,  a  certain  suspicion  was  gen- 
erally prevalent  as  to  the  genuine  character  even  of  the  best  of 
the  trade  papers  devoted  to  building  up  American  export  busi- 
ness. Doubtless  the  last  remnants  of  such  suspicion  were  long 
ago  outlived. 

In  any  case,  the  modern  export  trade  paper  is  a  thing  apart 
from  well-known  trade  papers  which  rank  as  authorities  in  their 
several  branches  of  industry  in  the  United  States.  Even  when 
published  in  the  English  language  it  contains,  or  need  contain, 


198  PRACTICAL  EXPORTING 

nothing  of  special  interest  to  Americans.  Its  purpose  is  an 
appeal  to  buyers  of  American  goods  in  foreign  countries.  There 
may  be  a  section  which  is  not  included  in  copies  of  the  paper 
sent  to  foreign  countries  but  is  intended  for  the  advice,  criti- 
cism, information,  and  general  help  of  American  manufacturers 
who  are  interested  in  the  export  trade.  This  is  in  the  nature 
of  a  supplement  and  does  not  enter  into  the  foreign  advertising 
problem.  The  influence  and  the  power  of  the  export  trade 
paper  as  an  advertising  medium  lies  in  its  circulation  among 
buyers  of  goods  in  foreign  countries. 

The  export  trade  paper  may  be  published  only  in  the  Spanish 
language;  or  in  English  and  Spanish,  in  separate  editions;  with 
editions  in  Spanish  and  in  Portuguese ;  or,  in  the  case  of  the 
American  Exporter,  with  separate  editions  in  English,  Spanish, 
French  and  Portuguese. 

Character  and  Appeal. — The  function  of  the  American  ex- 
port trade  journal  is  to  promote  the  interests  of  American 
exporting  manufacturers  and  merchants  of  all  trades.  Editori- 
ally it  is  designed  to  place  before  importers  and  business  houses 
in  all  parts  of  the  world  not  only  American  novelties  and  im- 
provements in  goods,  machinery  and  processes,  but  also  develop- 
ments and  progress  in  American  commercial  practice  and 
American  life  generally,  in  their  true  and  best  aspects.  To  an 
appreciable  extent  the  export  paper  has  also  a  National  as  well 
as  International  duty  to  perform,  correcting  false  impressions 
abroad  as  to  American  policies  and  politics,  too  frequently  in- 
spired by  brief  and  sensational  press  cablegrams.  How  impor- 
tant a  service  this  may  be  will  be  realized  from  a  consideration 
of  problems  presented  by  the  American  attitude  toward  Mexico, 
Haiti,  Santo  Domingo  and  many  growing  out  of  the  European 
War. 

It  follows  as  a  matter  of  course  that  such  a  paper  is  general 
in  character,  having  a  broader  appeal  than  a  trade  journal  de- 
voted exclusively  to  one  branch  of  industry.  From  the  adver- 
tising standpoint  manufacturers  use  it  to  reach  directly  the 
attention  of  importers  and  large  buyers  of  American  goods  in 
foreign  markets. 

This  class  includes  not  only  those  houses  which  are  called 
"general  importers"  but  also  large  retailers  and  even  some  im- 


ADVERTISING  TO  GET  EXPORT  TRADE         199 

portant  consumers  such  as  railways,  mines,  plantations,  indus- 
trial and  construction  companies — who  may  buy  for  themselves 
or  in  any  case  exercise  a  pronounced  influence  on  the  buying  of 
goods  from  this  country. 

General  importers  in  many  markets  play  a  relatively  more 
important  part  in  trade  distribution  than  do  jobbers  in  this 
country.  This  happens  because,  among  other  reasons,  many  re- 
tailers are  not  familiar  with  and  prefer  to  avoid  the  technicali- 
ties of  import  procedure,  the  intricate  diplomacy  sometimes 
necessary  in  getting  goods  through  the  customs,  the  problems 
of  ocean  freights  and  foreign  currencies,  exchange,  finance,  etc. 
Again,  in  some  countries  the  whole  trade  of  the  interior  is  vir- 
tually in  the  hands  of  general  importers  or  wholesale  dealers  at 
the  principal  ports  of  entry  because  of  inadequate,  slow  or  costly 
means  of  communication  and  because  of  credit  terms  locally  de- 
manded by  country  merchants. 

But  the  general  importer  or  wholesale  merchant  is  not  the 
whole  story.  He  may  buy  certain  goods  and  carry  large  stocks 
of  them ;  at  the  same  time  he  is  constantly  executing  ' '  indents 
for  his  retail  and  large  consumer  customers,  i.e.,  he  is  ready  at 
any  time  to  import  any  goods  whatever  which  his  customers  may 
desire  and  for  which  they  will  give  him  an  import  order  (then 
called  an  "indent")  whether  or  not  he,  the  importer,  ever  before 
dealt  in  those  or  similar  goods.  The  necessity  for  the  general 
character  as  well  as  distribution  of  the  export  paper  follows. 
Even  though  the  advice  given  by  the  paper  to  its  advertisers  may 
be  to  restrict  their  direct  business,  as  a  rule,  to  the  larger  houses, 
the  importers  and  wholesalers,  yet  the  buying  of  those  houses  will 
be  perceptibly  influenced  both  by  their  own  reading  of  export- 
ers' announcements  and  by  demands  made  on  them,  provoked 
by  the  same  cause,  by  retailers  and  large  consumers  like  indus- 
trial companies  and  contractors. 

The  importance  of  those  large  houses,  which  are  in  a  general 
way  called  "General  Importers,"  is  not  always  appreciated. 
As  an  illustration,  take  the  most  prominent  and  the  richest  im- 
porting house  in  the  principal  market  of  all  Latin  America. 
The  house  in  question  imports,  annually,  millions  of  dollars' 
worth  of  such  diverse  articles  among  others  as  lumber,  agricul- 
tural machinery,  gasoline  engines,  cement  and  building  mate- 


200  PRACTICAL  EXPORTING 

rials,  cutlery,  hardware,  carriages,  wagons,  saddlery,  office 
desks,  paper  and  stationery.  Obviously,  therefore,  the  export 
trade  paper  devoted  to  all  sorts  of  American  goods  which  may 
find  profitable  markets  in  foreign  countries  plays  an  important 
part  in  trade  development. 

Appeal  of  American  Novelties. — There  is  another  reason  for 
the  appeal  which  the  American  export  trade  paper  undoubtedly 
makes,  and  that  is  the  continuing  novelty  of  American  goods  in 
all  parts  of  the  world.  In  the  experience  of  any  man  who  has 
ever  traveled  widely  in  foreign  countries,  he  has  encountered, 
times  without  number,  the  buyer  who  asks,  "What  is  there  new 
in  America?  Can't  you  tell  us  about  some  novelty?"  Because 
all  the  world  has  for  years  looked  to  the  United  States  as  the 
source  of  novelties,  because  all  the  world  thoroughly  understands 
that  our  present  position  in  commerce  is  due  to  the  inventiveness 
of  the  American  mind,  to  our  progressiveness  and  our  adapt- 
ability and  versatility,  it  is  on  these  accounts  that  every  scrap 
of  information  about  new  American  goods  is  at  least  eagerly 
scrutinized  by  shrewd  foreign  buyers  on  the  keen  lookout  for 
new  opportunities  and  new  ways  of  making  money.  'This  state- 
ment indicates  some  of  the  advantages  of  a  general  trade  paper 
in  foreign  markets,  for  many  an  old  merchant  is  quite  willing 
to  add  a  new  line  to  his  established  business  if  he  can  find  one 
that  promises  exceptional  profit.  It  explains,  also,  why  the 
export  trade  paper  brings  actual  return  to  advertisers,  which 
are  unknown  and  which  cannot  be  expected  from  trade  papers 
here  at  home.  And  here  may  be  once  more  repeated — features 
of  novelty  and  originality  can  be  attached  to  any  line. 

The  Service  Offered  by  the  Export  Paper. — The  service  fea- 
ture to  advertisers,  included  now  by  many  publications  of  all 
sorts,  has  beyond  any  question  been  elaborated  by  the  modern 
export  trade  paper  to  a  degree  unknown  in  other  directions.  It 
is  the  aim  of  that  paper  to  offer  every  form  of  desirable  assist- 
ance to  its  advertising  clients,  in  some  departments  without 
charge,  in  others  at  first  cost.  The  service  offered  to  ad- 
vertising exporters  includes  the  translation,  from  and  into 
any  of  the  usual  languages  of  the  world  of  correspondence 
arising  out  of  their  advertising.  It  includes,  also,  trade  lists  of 
selected  names  of  buyers  in  any  desired  branch  of  industry  in 


ADVERTISING  TO  GET  EXPORT  TRADE         201 

y't}^  principal  commercial  centers  in  any  country  of  the  world; 
/also  the  giving  of  status  reports,  i.e.,  financial  ratings,  on  for- 
\'  eign  concerns  with  whom  prospects  of  business  develop.  In  ad- 
(iition  general  advice  and  assistance  is  available  regarding  satis- 
factory ways  of  promoting,  developing,  and  carrying  on  an  ex- 
port trade,  by  members  of  the  staff  of  such  a  paper  who  have  had 
considerable  personal  experience  in  exporting  and  in  traveling 
and  doing  business  in  foreign  markets. 

The  exporter  is  thus  enabled  to  conduct  his  correspondence 
with  his  foreign  prospects  and  customers  in  the  language  pre- 
ferred by  them.  He  can  learn  who  and  what  they  are,  their 
commercial  character,  local  and  general  trade  reputation  and 
financial  ability.  He  secures  mailing  lists  not  only,  but  is  as- 
sisted in  arriving  at  an  intelligent  idea  of  conditions  in  any 
given  line  of  trade  in  the  principal  foreign  markets.  It  is  e^vi- 
dent,  therefore,  that  patronage  of  the  columns  of  the  export 
trade  press  means  a  good  deal  more  than  mere  publicity. 

Short-Time  Advertising  Useless. — Effects  of  export  advertis- 
ing are  cumulative,  just  as  are  the  eft'ects  of  any  advertising. 
In  the  export  field,  however,  it  is  especially  useless  to  contem- 
plate a  mere  experiment  for  a  short  time ;  for  example,  for  one 
month  or  three  months.  In  view  of  the  long  range  of  a  cam- 
paign for  business  with  foreign  countries  it  is  quite  impossible 
to  judge  of  the  actual  effect  of  publicity  of  this  sort  in  the 
course  of  three  or  four  months  only.  As  has  already  been 
pointed  out,  no  replies,  even  from  the  most  pointed  sort  of  per- 
sonal correspondence,  can  be  expected  from  such  important 
markets  as  the  Argentine  Republic  and  Australia  within  three 
months'  time.  The  first  reading  of  an  export  advertisement  is 
no  more  certain  to  bring  a  reply  than  in  the  home  trade.  The 
manufacturer,  therefore,  who  contemplates  an  advertising  cam- 
paign as,  an  adjunct  to  his  efforts  to  establish  his  goods  profitably 
in  foreign  fields,  should  plan  for  an  experiment  of  not  less  than 
one  year  and  preferably  for  two  years  as  a  minimum.  The 
export  trade  paper  is  clearly  and  for  sundry  reasons  to  be  con- 
sidered as  an  advertising  medium  on  an  entirely  different  basis 
from  a  purely  domestic  trade  paper.  Moreover,  results  in  the 
way  of  actual  orders  are  not  to  be  gauged  from  returns  of  a  month 
or  three  months.     Enquiries  must  be  developed  into  orders. 


202  PRACTICAL  EXPORTING 


EXPORT  ADVERTISING  SCHEMES 

Because  export  trade  is  still  so  new  to  many  American  manu- 
facturers who  may  think  of  advertising  for  that  trade,  alluring 
prospects  held  out  in  glittering  and  tempting  fashion  by  all 
sorts  of  schemers  continue  now,  as  for  twenty  years  past,  to 
prosper  more  or  less.  In  no  other  field  of  advertising  is  a  more 
careful  analysis  of  claims,  experience,  records,  ability  and  re- 
sponsibility necessary.  No  other  field,  perhaps,  has  been  so 
often  and  so  successfully  cultivated  by  the  faker.  W.  F. 
Wyman,  Export  Manager  of  Carter's  Ink,  says:  "The  same 
brand  of  domestic  common  sense  that  protects  the  cash  box 
against  'blue  sky'  advertising  projects  at  home  must  be  on 
guard  against  similar  schemes  to  secure  foreign  sales  by  mystic 
methods. ' ' 

House  Organs. — The  house  organs,  only  a  few  in  number, 
maintained  usually  by  American  export  commission  houses,  are 
not  often,  if  ever,  to  be  classed  as  export  trade  papers  or,  in- 
deed, as  general  advertising  media.  They  are  issued  primarily 
as  advertisements  of  their  publishers — the  export  commission 
-houses.  In  a  succeeding  chapter  we  shall  examine  the  province 
and  operations  of  the  export  commission  house.  From  that 
study  it  will  become  apparent  that  publications,  issued  by  such 
houses,  no  matter  if  they  appear  in  the  guise  of  a  trade  paper, 
appeal  chiefly  if  not  solely  to  the  special  foreign  clients  of  the 
house  issuing  the  organ.  It  will  be  quite  clear  after  a  little 
study  that  the  goods  advertised  in  such  an  organ  are  likely  to  be 
thought,  by  any  merchant  into  whose  hands  a  copy  of  it  may 
fall,  to  be  agencies  controlled  by  the  American  house  issuing  the 
organ.  It  may  often  happen,  on  this  account,  that  such  adver- 
tisements may  be  an  actual  handicap  to  the  extension  of  foreign 
sales,  because  any  but  the  regular  clients  of  the  publishers,  who 
are  not  primarilj-  publishers  but  are  merchants,  may  prefer  to 
do  their  American  buying  through  other  export  commission 
houses,  and  not  through  that  house  which  seems  to  be  advertis- 
ing certain  goods  as  its  agencies.  It  may  even  be  thought  that 
the  goods  thus  advertised  are  not  available  through  any  other 
source  whatsoever. 


ADVERTISING  TO  GET  EXPORT  TRADE         203 

Unfortunately  for  all  concerned,  for  the  publishers  of  such 
periodicals  as  well  as  for  other  publishers  and  not  infrequently 
for  the  advertisers  themselves  in  these  house  organs,  the  history 
of  this  sort  of  export  advertising  has,  in  the  past,  been  disfigured 
by  practices  that  have  savored  of  "graft,"  not  to  put  too  fine  a 
point  on  it.  Very  likely  such  practices  may  not,  of  late,  be 
known  or  at  least  favored,  but  in  years  gone  by  some  of  these 
export  hoiLses  have  actually  threatened  to  boycott  manufactur- 
ers who  declined  to  place  advertising  in  their  house  organs,  while 
it  has  rather  frequently  happened  that  advertising  contracts 
have  been  solicited  on  the  basis  of  actual  orders  to  be  placed 
with  manufacturers,  which  orders  have  been  at  the  time  repos- 
ing in  the  solicitor's  pocket,  received  by  the  export  house  without 
special  effort  from  some  client  abroad  who  had  otherwise  learned 
of  the  goods  in  question.  On  the  other  hand,  the  promised 
orders  have  sometimes  failed  to  materialize. 

A  good  many  manufacturers  regard  advertising  in  these  house 
organs  not  as  desirable  publicity  in  itself,  but  as  a  gift  or  contri- 
bution on  their  part  to  secure  the  good  will  of  the  buyers  of 
these  houses.  The  policy  of  a  manufacturer  in  this  regard  must, 
of  course,  be  dictated  by  himself  and  governed  by  circumstances 
in  each  case.  Evidently,  however,  such  advertising  differs  rad- 
icall}'  from  that  in  the  legitimate  export  trade  paper  whose 
publishers  have  no  outside  interests. 

Export  Editions. — The  "Special  Export  Edition"  is  by  no 
means  a  modern  development.  We  have  always  had  them  with 
us.  The  advertising  managers  of  all  sorts  of  domestic  publica- 
tions have  occasionally,  especially  in  a  dull  season,  been  inspired 
by  the  brilliant  idea  of  adding  to  their  revenues  by  making  a 
special  appeal  to  advertisers  on  the  basis  of  an  "Export  Edi- 
tion," which,  now  and  then,  has  actually  been  produced,  partlj' 
or  in  whole,  in  one  or  in  several  foreign  languages,  or  attempts  at 
such  languages.  This  practice  has  characterized  domestic  trade 
papers,  even  daily  newspapers  and  popular  monthly  magazines. 
Such  editions  are  regarded  by  most  shrewd  and  experienced  ad- 
vertisers as  pure  speculations.  Actual  experience  in  such  ad- 
vertising has  almost  without  exception  resulted  unfavorably 
when  returns  have  been  carefully  traced.     Costs  for  such  ad- 


204  PRACTICAL  EXP'ORTING 

vertising  are  usually  excessive.  Publishers  of  these  special  edi- 
tions, having  no  personal  knowledge  of  foreign  markets  or  the 
personnel  of  such  markets,  seldom  know  how  to  distribute  their 
editions  intelligently,  or  have  any  means,  on  which  they  can 
depend,  of  securing  the  right  sort  of  addresses  to  which  to 
mail  copies.  More  than  a  few  instances  are  known  when  a 
considerable  part  of  a  large  circulation  which  has  been  prom- 
ised has  remained  undistributed  in  the  printer's  warehouse, 
ultimately  to  be  sold  as  old  paper.  Most  publishers  attempting 
these  special  editions  seem  to  rely  chiefly  for  their  patronage 
on  their  regular  advertisers  and  the  prestige  maintained  with 
them  on  account  of  their  undoubted  value  and  high  position  as 
domestic  media. 

Whatever  else  may  be  said  of  the  special  edition  scheme,  it 
also  is  not  ■^o  be  confounded  with  a  carefully  planned,  logical, 
consistent  advertising  campaign  through  the  reputable  export 
trade  press. 

ForeigTi  Directories. — Now  and  then,  indeed  with  more  or 
less  regularity,  American  exporters  are  approached  by  publish- 
ers of  directories  of  one  sort  or  another.  Sometimes  it  is  a  local 
directory  published  in  some  foreign  country.  Sometimes  it  is  a 
directory  of  American  manufacturers  to  be  published  here  and 
distributed  abroad. 

Opinions  differ  widely  as  to  the  advantage  of  directory  pub- 
licity here  at  home,  in  the  United  States.  Certainly  local  direc- 
tories in  foreign  countries  are  subject  to  more  than  the  common 
criticism,  because  they  are  never  so  well  done  as  ours,  announce- 
ments are  never  so  well  displayed,  the  directories  themselves  are 
never  so  generally  used,  as  in  this  country.  If  any  argument  on 
the  latter  point  is  needed,  it  may  be  borne  out  to  some  extent  by 
the  fact  that  a  good  many  important  foreign  cities  boast  of  no 
directories  whatsoever.  Certainly  it  is  a  fact  within  the  experi- 
ence of  any  one  who  has  traveled  widely  abroad  that  any  of  these 
local  directories  have  nothing  like  the  circulation,  i.e.,  general 
use,  which  similar  publications  in  cities  of  the  United  States  can 
claim. 

Directories  of  American  Manufacturers. — Periodically,  there 
appear  in  this  country,  propositions  for  the  publication  of  direc- 
tories of  American  manufacturers,  usually  more  or  less  elabo- 


ADVERTISING  TO  GET  EXPORT  TRADE         205 

rately  classified  by  trades,  which  are  to  be  distributed  in  foreign 
countries  for  the  use  of  importers  who  are  supposed  not  to  know 
where  to  buy  goods  of  American  origin  in  special  lines  in  which 
they  may  be  interested. 

On  its  face,  such  a  project  has  much  to  commend  it.  How 
does  it  happen  that  the  promoters  and  publishers  of  one  such 
directory  seldom  bring  out  another?  From  their  standpoint 
the  explanation  is  undoubtedly  the  great  expense  involved  in 
promotion,  preparation  and  circulation.  The  compilation  of 
any  such  directory  that  will  even  make  a  pretense  of  passing 
casual  inspection  as  half  complete  or  reliable  is  a  Herculean, 
practically  an  impossible  task.  If  the  ''^classified  lists"  are  not 
comprehensive,  not  to  say  even  fairly  complete,  the}"  are  almost 
if  not  quite  useless — and  lists  never  are  or  can  be  full,  nor  can 
listing  be  exact  of  the  endless  variety  of  goods  made  by  thou- 
sands of  concerns.  Accordingly  not  only  are  publishers  of  these 
directories  discouraged,  but  foreign  buyers  who  may  have  wel- 
comed them  at  first  are  disappointed  after  one  or  two  experi- 
ments with  them  and  cast  them  forth  to  the  dust  heap. 

As  an  advertising  medium  for  an  American  manufacturer 
such  a  directory  has  only  transient  value  as  a  rvile  and  is,  more- 
over, open  to  this  objection — there  is  no  opportunity  for  change 
of  copy;  an  announcement  becomes  little  more  than  a  business 
card. 

Consular  Indices. — Another  variation  of  the  "directory" 
scheme  is  sometimes  presented  in  the  form  of  a  proposition  to 
list  the  manufacturer's  goods  with  all  American  Consulates 
throughout  the  world,  possibly  indexing  the  goods  made  under 
appropriate  trade  headings.  It  may  be  observed  that  there  are 
only,  in  round  numbers,  three  hundred  American  consular  offices 
throughout  the  world.  It  requires,  therefore,  no  great  expense 
or  effort  on  the  part  of  a  manufacturer  to  bring  his  goods  di- 
rectly to  the  attention  of  each  one  of  these  consular  offices,  and 
probably  more  forcibly  and  emphatically  through  a  personal 
letter  than  in  any  other  fashion.  Not  only  is  tlie  direct  effort 
in  this  case  usually  cheaper  and  more  effective,  if  properly  done, 
but  experience  in  the  past  with  consular  files  or  indexes  some- 
times proposed  has  proven  that,  because  the  idea  involved  in  a 
truly  tremendous  undertaking  has  never  been  fully  carried  out 


206  PRACTICAL  EXPORTING 

and  because  no  attention  whatever  has  been  paid  to  keeping 
them  up  to  date,  they  have  promptly  fallen  into  innocuous  desue- 
tude, and  the  furniture  has  been  relegated  to  the  garret. 

It  will  be  acknowledged  that  any  form  of  publicity  is  good. 
The  question  as  to  the  worth  of  advertising  of  the  several  forms 
just  described  is  one  primarily  of  good  faith  on  the  part  of  the 
schemers  and  of  their  ability  to  carry  out  honestly  their  pro- 
posals; next  it  is  a  question  of  the  real  value  of  such  publicity 
as  compared  with  the  charges  demanded. 

LOCAL  ADVERTISING  IN  FOREIGN  FIELDS 

There  is  no  lack  of  means  of  advertising  goods  locally  in  every 
country  of  the  world,  but  the  character  and  value  of  these  means 
vary  as  night  from  day.  The  crowd  of  export  advisers  who  have 
recently  sprung  up  in  the  United  States  very  commonly  urge 
the  necessity  of  local  advertising  by  American  manufacturers 
who  are  desirous  of  selling  their  wares  in  foreign  markets. 
Such  advice,  however,  is  chiefly  marked  by  glittering  generalities, 
seldom  backed  by  convincing  arguments  or  distinguished  by 
clear  reasoning. 

The  utter  absurdity  of  advertising  goods  locally  until  the 
goods  themselves  are  on  the  market  and  available  to  buyers, 
that  is,  to  local  consumers,  must  be  clear  after  a  moment's 
thought.  The  would-be  exporter's  first  effort  obviously  must  be 
to  get  his  goods  introduced  among  the  merchants  in  a  foreign 
market ;  to  have  stocks  of  his  goods  on  hand  for  the  supply  of 
any  demand  that  may  be  created  by  local  advertising  on  his  own 
part  or  by  his  local  agents.  Until  this  has  been  accomplished, 
advertising  in  any  local  manner  must  evidently  be  a  sheer  waste 
of  money. 

On  the  other  hand,  advertising  locally  for  the  sake  of  obtain- 
ing a  local  agent  can  only  be  regarded  as  the  limit  of  extrava- 
gance. To  promote  consumer  sales  after  means  of  distribution 
have  been  secured,  all  sorts  of  local  pul)licity  within  the  means 
of  those  interested  are  most  assuredly  to  be  recommended. 
Many  American  manufacturers  of  goods  most  susceptible  to  such 
means  of  increasing  sales,  are  already  to  be  numbered  among  the 
steadiest  patrons  of  foreign  advertising  media.     For  example, 


ADVERTISING  TO  GET  EXPORT  TRADE  207 

makers   of   proprietary   medicines,    soaps,   etc.     What   are   the 
foreign  advertising  media  which  are  available? 

European  Export  Trade  Papers. — As  in  the  United  States, 
there  are  export  trade  papers  in  other  manufacturing  coun- 
tries. None  of  these  foreign  papers,  however,  approximate  the 
American  in  their  make-up,  their  attractiveness,  and  hence, 
it  may  safely  be  argued,  in  the  effectiveness  of  their  appeal. 
There  are  one  or  two  good  British  export  papers  of  general 
character.  There  are  several  other  British  publications  devoted 
exclusively  to  special  foreign  markets.  It  will  be  noted  from 
an  examination  of  any  of  these  publications  that  their  tone 
is  distinctly,  sometimes  (to  an  American)  unpleasantly,  Brit- 
ish and  furthermore  that  the  editorial  matter  published  is 
aimed  largel}^  at  the  British  manufacturer  and  exporter  and 
not  at  the  buyer  in  foreign  lands,  indicating,  perhaps,  that  the 
circulation,  intended  or  actual,  is  at  home  in  the  United  King- 
dom rather  than  abroad  among  foreign  buyers  of  English  goods. 
Few  of  them  appear  in  any  other  than  the  English  language. 

There  have  been  one  or  two  export  trade  papers  in  Ger- 
many and,  in  at  least  one  case,  editions  were  published  in 
other  languages.  These  German  publications  were  rather  cheap 
affairs,  from  the  American  point  of  view. 

There  have  been  a  large  number  of  French  papers  devoted 
to  French  colonial  and  general  export  trade,  but  they  are  of 
entirely  different  character  from  the  American,  British  or  Ger- 
man. Most  of  them  appear  in  newspaper  form.  Few  of  these 
journals  claim  any  foreign  circulation. 

There  have  existed  also  Belgian,  Dutch,  Danish,  Austrian 
and  Spanish  papers  devoted  to  the  expansion  of  the  national 
trade  of  these  several  countries  in  foreign  markets.  None  of 
them  ever  have  been  or  ever  need  be  seriously  considered  by 
American  advertisers,  although  one  or  two  are  journals  of  high 
character  editorially.  The  evident  undesirability  of  advertis- 
ing American  goods  in  the  columns  of  any  foreign  export  trade 
medium,  of  no  matter  what  nationality,  side  by  side  with  the 
native  goods,  on  which  naturally  the  chief  emphasis  of  the 
whole  publication  is  laid,  would  seem  to  require  no  argument. 

Foreign  Trade  and  Class  Publications. — Trade  papers  ?.v} 
even  class   publications   in   other   countries   are   seldom   of    '/.; 


208  PRACTICAL  EXPORTING 

character  and  caliber  of  our  own.  Moreover,  their  numbers 
are  limited.  In  all  Latin  America,  for  example,  there  are  only 
two  or  three  trade  papers  which  we  should  be  willing  to 
recognize  as  answering  that  description  in  any  degree.  If  there 
are  certain  high  class  engineering  journals  in  Europe,  it  can- 
not be  said  that  there  is  a  large  agricultural  implement  press 
worthy  the  name.  There  may  be  a  good  hardware  trade  paper 
in  one  countrj^  but  no  trade  publication  devoted  to  shoes  or 
furniture.  There  are  many  automobile  papers  in  many  differ- 
ent lands,  but  few  are  trade  papers;  many  are  for  "user" 
circulation  and  in  some  countries  devoted  incidentally,  if  not 
primarily,  to  sport  in  general.  One  may  be  able  to  pick  out 
a  trade  paper  in  some  particular  country  which  may  be  desirable 
for  a  special  purpose,  but  this  is  a  question  of  a  single  medium, 
not  one  of  general  policy. 

Foreign  Dailies,  Weeklies  and  Monthlies. — While  there  are 
some  great  daily  newspapers  published  in  foreign  countries 
which  have  a  wide  circulation,  even  over  a  whole  continent, 
yet  there  is  the  greatest  imaginable  variation  in  the  circulation 
and  influence  of  the  many  papers  of  this  description  every- 
where. Few  such  journals  in  Latin  America  have  any  char- 
acter or  influence  worth  speaking  of.  In  any  event,  use  of 
their  columns  for  advertising  purposes  is  to  be  regarded  as  a 
means  for  consumer  publicity. 

In  almost  all  countries,  there  are  many  society  and  humorous 
weeklies,  naturally  of  varying  attractiveness,  although  some 
of  them  have  an  enormous  and  widespread  circulation.  In 
Europe  there  are,  as  every  one  knows,  many  monthh'  magazines 
of  varied  characteristics.  Some  of  them  certainly  compare 
rather  favorably  with  our  similar  American  publications. 

Speaking  on  "Foreign  Advertising  Media"  before  the  Sixth 
National  Foreign  Trade  Convention,  Chicago,  1919,  Howard 
G.  Winne,  Manager,  Johnston  Overseas  Service,  enumerated 
by  name  some  of  the  principal  papers,  dailies,  weeklies  and 
monthlies,  in  many  of  the  principal  countries  of  the  world. 
Purely  by  way  of  hints  as  to  media  which  are  to  be  recom- 
mended the  following  extracts  from  his  address  may  be  quoted: 

"In  Argentina  there  is  a  greater  variety  of  worth-while  pub- 
lications   than    in    any    other    Latin    American    country.     In 


ADVERTISING  TO  GET  EXPORT  TRADE  200 

Buenos  Aires  we  have  powerful  dailies  such  as  La  Frensa,  La 
Nacion,  and  La  Razon  in  Spanish,  and  other  dailies  published 
in  English,  French  and  Italian,  which  serve  their  purpose  as 
a  medium  to  reach  the  cosmopolitan  population. 

"In  the  magazine  field  of  Argentina,  observe  the  popular 
high-class  weekly,  Caras  y  Caretas,  with  a  circulation  spread- 
ing up  and  down  the  coast  and  extending  to  the  remote  in- 
terior.    It  is  essentially  a  satirical,  non-partisan  weekly  review. 

"As  a  vehicle  to  reach  the  best  classes  of  society,  Plus  Ultra 
admirably  meets  the  demand.  This  super-artistic  monthly  pre- 
sents an  excellent  proof  that  South  Americans  fully  under- 
stand the  art  of  printing.  Printed  in  colors,  on  coated  stock, 
with  embossed  covers,  tissue  protected — this  review  equals,  if 
not  exceeds  in  beauty  of  typography  and  art,  anything  that  is 
published  in  the  United  States. 

"Australasia  has  its  full  share  of  reliable  media.  As  a  chan- 
nel through  which  to  present  a  daily  message,  we  have  the 
Melhourne  Herald,  Melhourne  Age,  Sydney  Morning  Herald, 
Brisbane  Courier,  Wellington  Post,  The  Press,  of  Christchurch, 
N.  Z.,  etc. 

"Dominating  and  important  weeklies  have  more  of  a  na- 
tional circulation,  extending  through  the  whole  country.  In 
this  class  can  be  placed  the  Sydney  Bulletin,  The  Australasian, 
and  others. 

"Standing  out  prominently  among  the  trade  papers  of  that 
section  are  such  reviews  as  Australasian  Hardware  &  Machinery, 
Chemist  tt  Druggist  of  Australasia,  Chemical  Engineering  & 
Mining  Review,  Australasian  Leather  Trades  Review  and  sub- 
stantial motor  trade  papers." 

Other  Local  Advertising  Media. — Every  known  form  of  ad- 
vertising is  available  in  other  countries  as  in  the  United  States. 
We  can  claim  no  monopoly  of  ingenious  advertising  ideas,  al- 
though our  inventions  and  adaptations  have  set  the  pace  for 
the  whole  world.  In  every  country  there  are  bill-boards  that 
can  be  used  and  street  cars  and  omnibuses  which  carry  ad- 
vertising cards.  There  are  spaces  for  advertising  in  the  rail- 
road stations.  Electric  signs  and  flashers  make  "Great  White 
Ways"  in  other  cities  besides  those  of  the  United  States.  Even 
the  movies  are  used  for  advertising*  in  many  a  foreign  country. 


210  PRACTICAL  EXPORTING 

All  of  these  advertising-  adjuncts  are  good  and  desirable  when 
they  do  not  cost  too  much,  but  they  should  be  employed  only  by 
and  with  the  advice  of  competent  advertising  agents. 

Local  Advertising  Secondary,  not  Primary. — It  has  already 
been  said  that  an  effort  to  get  goods  widely  used  in  a  cerlaai 
locality  through  local  advertising  there,  before  the  goods  tl.e..i- 
selves  are  on  the  market,  is  an  obvious  absurdity.  On  the  otlicr 
hand,  to  increase  the  demand  for  goods,  to  get  more  retail  arid 
hence  wholesale  trade  through  the  influence  of  consumer  de- 
mand, local  advertising  is  b}^  all  means  to  be  commended. 
When  stocks  of  goods  are  available  in  a  given  market,  wlicn 
the  man  in  the  street  who  wants  to  buy  an  advertised  article 
can  buy  it,  then,  but  not  until  then,  it  is  time  to  begin  to  think 
about  plans  for  further  developing  that  market,  for  increasing 
dealers'  trade  through  demand,  for  riveting  fame  of  maker  or 
brand. 

Consumer  publicity  is,  as  hundreds  of  American  manufac- 
turers are  beginning  to  realize,  a  highly  desirable,  in  fact, 
necessary  adjunct  to  the  building  up  of  the  greatest  possible 
foreign  demand  for  American  goods.  In  this  regard,  F.  B. 
Amos,  formerly  foreign  advertising  manager  of  the  Studebaker 
Corporation,  remarked  at  the  St.  Louis  convention  of  the  As- 
sociated Advertising  Clubs  of  the  World:  ''American  manufac- 
turers are  slowly  but  surely  realizing  that  when  they  have  sold 
goods  to  merchants  abroad  they  have  only  taken  the  first  step 
in  building  up  a  permanent  business.  The  merchandise  must 
be  moved  rapidly  off  the  counters  and  floors  of  our  foreign  dis- 
tributors, just  as  it  must  in  this  country,  and  as  local  newspaper 
and  magazine  advertising  in  the  United  States  assists  in  the 
rapid  movement  of  merchandise,  so  the  same  kind  of  advertising 
abroad,  properly  conducted,  produces  satisfactory  results.  The 
use  of  local  foreign  mediums  therefore  is  essential  to  the  proper 
development  and  securing  of  increase  in  profits  from  American 
export  business." 

Advertising  Rates  and  Agencies. — The  situation  in  foreign 
countries  as  to  advertising  rates  in  local  media  has,  until  very  re- 
cently at  any  rate,  been  comparable  to  the  condition  in  this 
country  twenty-five  years  ago.  While  formerly  rates  were  as 
flexible  as  a  rubber  band,  they  are  now  being  rapidly  stabilized, 


ADVERTISING  TO  GET  EXPORT  TRADE  211 

at  least  in.  the  countries  of  greater  development.  A  reliable  for- 
eign advertising  agency  in  the  United  States  has  facilities  for 
learning  what  are  the  lowest  rates  consistent  with  the  best  serv- 
ice and  about  those  publications  which  are  really  worth  while  and 
which  adhere  closely  to  their  published  rates.  Through  using 
such  a  service  a  manufacturer  is  thoroughly  protected  in  this 
regard.  To  get  real  facts  a  busy  export  manager  needs  the  same 
type  of  advertising  assistance  and  counsel  as  do  his  domestic 
co-workers  in  their  field.  A  distinction  must  be  drawn  between 
the  foreign  advertising  agency,  operating  on  behalf  and  in  the 
service  of  American  advertisers,  and  the  publishers'  represen- 
tative, sometimes  an  American  concern  representing  a  number  of 
forign  advertising  media,  sometimes  the  office  in  this  country  of 
a  single  important  foreign  medium.  The  latter  are  primarily 
interested  in  the  publications  which  they  represent. 

Complex  Conditions  in  Foreign  Advertising  Campaigns. — 
To  quote  again  from  the  address  of  Frank  B.  Amos  before  the 
Associated  Advertising  Clubs  of  the  World:  "One  condition 
that  makes  foreign  advertising  more  complex  than  domestic  is 
the  fact  that  the  publications  to  be  used  are  so  far  distant 
from  the  manufacturer  and  his  advertising  organization.  When 
I  was  foreign  advertising  manager  of  the  Studebaker  Corpora- 
tion, Automobile  Division,  I  learned  that  my  campaigns  had  to 
be  planned  and  prepared  long  before  the  advertising  could  ap- 
pear; that  unless  great  foresight  was  used,  entirely  different 
conditions  might  exist  when  the  printed  arguments  were  read 
than  were  in  the  mind  of  the  writer  some  three  or  four  months 
before,  when  he  prepared  his  copy. 

' '  Our  successful  American  manufacturers  and  advertising  men 
have  become  so  accustomed  to  the  high  grade  service,  and  quick 
action  given  by  domestic  publishers  that  they  chafe  at  the  delays 
and  handicaps  incident  to  dealing  with  publishers  many  thou- 
sands of  miles  distant.  An  exchange  of  letter  correspondence 
with  a  majority  of  these  publishers  requires  from  six  weeks'  to 
three  months'  time.  Cable  correspondence  is  too  expensive  ex- 
cept in  great  emergencies. 

"In  a  foreign  newspaper  campaign  every  possible  detail  must 
be  planned  in  advance.  The  production  situation  at  the  factory 
for  several  months  to  come  should  be  known.     Local  trade  con- 


212  PRACTICAL  EXPORTING 

ditions  in  each  country  should  be  understood.  The  customs  of 
the  country,  the  types  of  people  and  their  purchasing  power 
should  be  considered." 

Cooperation  with  Foreign  Dealers. — It  sometimes  seems  to 
American  manufacturers  that  the  logical  as  well  as  the  easy  plan 
for  them  to  follow  in  attempting  to  carry  out  local  consumer  ad- 
vertising is  some  form  of  cooperation  with  their  local  dealer,  dis- 
tributor or  agent.  This  may  have  been  true  in  the  past  in  the 
absence  of  any  better  means  of  controlling  foreign  publicity, 
that  is,  before  there  existed  in  the  United  States  advertising 
services  especially  devoted  to  the  placing  and  handling  of  for- 
eign publicity.  It  will  be  found,  however,  that  nowadays  manu- 
facturers who  once  arranged  for  local  advertising  in  foreign 
markets  with  their  local  dealers  on  the  ground  have  now  given 
up  that  idea  and  they  must  have  had  good  reasons  for  so  doing. 
Very  few  dealers,  indeed,  in  any  countries  are  advertising  men, 
certainly  not  advertising  experts.  As  a  rule  their  advertising 
methods  are  crude.  If  allowed  by  themselves  to  handle  adver- 
tising for  American  manufacturers  or  merchants,  with  but  few 
exceptions  such  expenditures  will  be  waste  investments.  The 
dealer's  cooperation  is  desirable.  His  enthusiasm  should  be  de- 
veloped. Any  prejudice  he  may  have  against  control  of  adver- 
tising in  his  field  by  the  manufacturer  should  be  and  can  be  over- 
come by  careful,  diplomatic  correspondence  and  logical  reason- 
ing. The  right  kind  of  an  advertising  organization  in  this  coun- 
try, which  thoroughly  understands  this  dealer  problem,  can 
greatly  assist  any  manufacturer  in  bringing  about  a  satisfactory^ 
combination  of  cooperation  on  the  part  of  the  dealer  with  the 
manufacturer's  plans  and  policies  and  the  agency's  counsel  and 
service.  To  assure  the  same  high  grade  of  advertising  publicity 
in  all  foreign  fields,  its  general  outline  must  be  determined  at 
the  American  factory  with  a  full  knowledge,  of  course,  of  the 
dealer  situation  and  evers^thing  that  enters  into  it,  and  the  cam- 
paign should  be  conducted  according  to  the  ideas  of  the  factory 
with  as  little  deviation  as  possible.  All  this  means  that  the 
men  at  the  factory  should  avail  themselves  of  the  necessary  in- 
formation and  service  in  order  to  be  sure  that  they  understand 
what  they  are  planning  and  putting  into  execution. 


ADVERTISING  TO  GET  EXPORT  TRADE         213 


EFFECTIVE  EXPORT  ADVERTISING  COPY 

The  purpose  of  one's  first  advertising  may  be  general  pub- 
licity or  to  establish  agents  or  wholesale  distributors  in  desirable 
foreign  fields.  In  either  case,  it  must  be  assumed  that  the 
American  export  trade  paper  will  be  regarded  as  the  best,  or 
at  least  the  first,  means  to  be  employed.  Possibly  nine  out  of 
every  ten  advertisers  want  "results."  It  is  not  to  be  forgotten 
that  all  any  advertising  medium  can  accomplish  is  to  bring  the 
advertiser's  copy  to  the  attention  of  prospects.  Results  from 
advertising,  foreign  as  well  as  domestic,  must  primarily  depend 
on  the  copy,  so  far  as  inquiries  go.  Actual  business,  from  for- 
eign markets,  at  least,  will  almost  invariably  depend  on  suc- 
ceeding correspondence  with  prospects  thus  discovered.  The 
duty  of  the  advertising  medium  is  finished  when  the  display 
and  circulation  promised  have  been  given.  The  extraordinary 
variety  and  extent  of  the  "service"  offered  by  the  American  ex- 
port trade  paper  of  to-day  is  really  a  free  gift  on  its  part.  It 
is  a  thing  aside  and  apart  from  the  advertising  itself.  The  re- 
sponsibility for  actual  results  from  advertising  remains,  in  any 
case,  with  the  advertiser  and  with  no  one  else. 

To  Stimulate  Inquiries. — In  the  words  of  A.  E.  Ashburner, 
Manager  of  the  Foreign  Sales  Department,  American  Multi- 
graph  Sales  Co. :  "I  don 't  care  in  what  form  it  is,  advertising 
is  primarily  for  the  purpose  of  ascertaining  who  is  interested  in 
your  goods.  In  other  words,  inquiries.  Ones  that  come  from 
good  live  prospects,  too.  Inquiries  will  do  no  one  any  good 
unless  he  has  an  organization  back  of  him  that  can  develop  these 
inquiries.  Too  many  concerns  advertise  and  trust  to  the  Al- 
mighty for  results.  Advertising  is  merely  a  means  to  an  end 
in  getting  acquainted  with  a  man  and  teaching  him  about  your 
product.  It  is  just  the  same  in  Kankakee  as  it  is  in  Vladivo- 
stok." 

If,  in  the  great  majority  of  cases,  it  is  the  desire  of  the  adver- 
tiser who  seeks  first  to  introduce  his  goods  abroad,  to  stimulate 
inquiries  from  possible  buyers  in  foreign  markets,  then  it  is  evi- 
dent that  the  great  thing  in  his  advertising  copy  must  be  a  catch 
line  of  some  sort  to  attract  the  attention  of  the  kind  of  buyer 


214  PRACTICAL  EXPORTING 

wanted.  Here,  again,  it  is  not  to  be  forgotten  that  American 
slang  expressions  are  not  catchy  because,  in  most  cases,  they  will 
be  unintelligible  to  foreign  readers.  To  gain  attention,  we  have 
to  remember  that  it  is  the  article  advertised  which  is  important, 
not  so  much  the  name  and  address  of  the  maker.  If  the  pros- 
pect has  an  interest  in  the  goods  advertised,  he  will  dig  out  the 
address  to  which  he  must  write  about  them.  An  illustration  of 
the  article  advertised  will  often  help  materially  in  attracting  to 
the  announcement  the  attention  of  buyers  interested  in  a  par- 
ticular branch  of  trade.  The  illustration  should  show  the  arti- 
cle itself,  not  something  else.  If  the  article  is  only  a  part,  then 
the  cut  should  not  show  the  whole  unless  the  advertiser  sells 
the  whole.  On  the  other  hand,  a  cut  of  a  part  may  be  blind  and 
meaningless,  at  least  to  a  foreigner,  unless  it  is  shown  mounted, 
or  in  connection  with  a  whole.  In  such  a  case  the  cut  may  be  so 
made  as  to  show  clearly  just  what  it  is  which  the  advertiser  is 
offering  for  sale. 

Having  attracted  the  attention  of  the  buyer,  and  we  should 
take  care  that  we  look  for  a  buyer  in  the  branch  of  trade  which 
we  seek  to  cultivate,  we  have  to  rivet  that  attention  by  the  story 
of  the  goods  to  which  it  is  directed. 

Proper  display  is  therefore  essential.  The  prospect's  atten- 
tion should  not  be  distracted  by  a  great  quantity  of  copy,  and 
plenty  of  white  space  should  be  arranged,  in  order  that  the 
striking  features  of  the  announcement  may  make  a  quick  and 
effective  impression.  Since  we  are  now  considering  an  export 
announcement  as  an  effort  to  create  inquiries  from  possible  buy- 
ers in  other  countries,  it  would  seem  to  follow  that  no  object  is 
to  be  gained  by  going  into  great  detail  regardnig  the  goods 
advertised.  It  is  impossible  to  tell  the  whole  story  about  any 
article  in  the  usual  space  employed  by  advertisers.  Usually  it 
is  not  desirable  to  tell  more  than  enough  to  stimulate  the  curi- 
osity of  the  prospect  and  impel  him  to  write  for  fuller  details. 
Hence,  the  advertiser's  shrewdness  and  ability  is  called  into  play 
to  select  those  few  phrases  or  sentences  which  will  be  most 
effective,  and  which  the  space  at  his  disposal  enables  him  to  use 
in  striking  form. 

Technical  Copy. — Never  ought  highly  technical  copy  to  be 


ADVERTISING  TO  GET  EXPORT  TRADE         215 

used  in  export  advertising.  The  kind  of  copy  which  may  per- 
haps be  suitable  as  an  appeal  to  trade  here  at  home  in  the 
columns  of  the  Icemakers'  Gazette  is  nine  times  out  of  ten  utterly 
unsuitable  as  an  appeal  to  importers  in  other  countries.  Many 
American  manufacturing  processes,  probably  the  greater  part  of 
our  highly  specialized  machinery,  are  not  known,  certainly  are 
not  fully  understood,  in  other  countries.  Technicalities  which 
are  the  every-day  language  of  a  trade  here  in  the  United  States 
are  an  unknown  tongue  even  to  English-speaking  foreigners. 
No  manufacturer  of  mechanical  appliances  should  contemplate 
transferring  bodily  his  announcement  in  an  American  trade 
paper  to  the  columns  of  the  export  trade  paper.  It  has  just  been 
argued  that  it  is  not  necessary  or  desirable  to  try  to  tell  the 
whole  storj^  in  the  export  announcement.  AVhat  is  essential  is 
the  indication  of  novelty  and  advantage  offered  by  the  device 
advertised,  so  worded  and  designed  as  to  arrest  the  attention 
of  people  in  other  countries  likely  to  buy  or  use  such  a  device 
and  prompt  them  to  write  for  full  details.  Such  details,  in  the 
announcement,  in  expert  catalogues  or  even  in  correspondence, 
must  not  be  of  the  same  technical  description  that  might  be 
employed  in  the  United  States.  They  must  be  simplified  in 
terms  and  elaborated  in  fuller  descriptions  which  foreign  pros- 
pects can  easily  and  immediately  comprehend,  even  if  they  never 
before  heard  of  anything  of  the  sort. 

Specialization  of  Advertised  Goods. — Our  object,  we  have 
agreed,  is  to  make  the  reader  of  our  announcement  think,  ' '  Here 
is  something  worth  looking  into,  another  American  innovation. 
Guess  I'll  write  and  find  out  about  it."  If  this  is  the  effect  we 
aim  at,  then,  like  the  description  of  our  goods  in  our  corre- 
spondence or  catalogues,  as  has  already  been  pointed  out,  our 
advertising  copy  ought  to  individualize  our  product.  We  ought 
to  give  a  brief,  but  as  "snappy"  as  possible  an  argument  or  two 
why  our  article  is  better  or  different,  what  its  advantages,  or 
what  exceptional  profit  is  to  be  made  from  it,  or  any  one  of  the 
strongest  selling  points  we  may  have,  which,  of  course,  are  innu- 
merable in  any  of  the  thousands  of  articles  and  hundreds  of 
branches  of  industry.  We  must  never  lose  sight  of  the  principle 
involved,  our  desire  to  make  the  man  who  sees  our  advertise- 


216  PRACTICAL  EXPORTING 

ment  believe  it  worth  while  writing  to  us  to  find  out  something 
more  about  what  we  are  announcing. 

Advertising  Sample  Offers. — Some  advertisers  believe  thor- 
oughly in  the  principle  of  including  sample  offers  in  their  an- 
nouncements. In  but  few  lines  should  free  samples  ever  be 
offered  to  foreign  buyers,  even  when  coupled  with  the  restric- 
tion that  applicants  must  write  on  "their  own  business  letter- 
heads." It  is  possible  to  waste  entirely  too  much  money  in  the 
distribution  of  free  samples  when  they  are  offered  indiscrimi- 
nately to  the  enormous  markets  of  the  whole  world,  and  any  at- 
tempt to  restrict  such  offers  induces  needless  complexities  into 
an  advertisement  which  always  ought  to  be  simple,  clear  and 
pointed. 

The  offer  in  the  advertisement  of  sample  assortments  of  goods 
at  a  fixed  price  is  usually  intended  as  an  effort  to  minimize  cor- 
respondence arising  out  of  the  announcement  by  inducing  a 
trial  order  for  the  actual  goods  in  the  first  letter  from  prospects. 
In  many  cases  the  sample  assortment  is  undoubtedly  to  be  rec- 
ommended as  good  advertising  copy.  Frequently,  however,  the 
assortments  offered  are  either  too  extensive  or  too  small,  and 
often  they  are  made  up  of  several  different  articles  some  of 
which  may  not  appeal  at  all  to  a  given  prospect  or  in  a  certain 
market.  ^lost  such  sample  assortments  apply  to  small  articles, 
and  the  only  economical  way  of  shipping  them  to  foreign  mar- 
kets is  through  the  parcel  post.  While  our  American  parcel  post 
has  been  extended  to  many  of  the  principal  markets  of  the 
world,  yet  it  does  not  reach  all  markets  and  some  embarrassment 
ensues  when  orders  for  sample  assortments  of  small  volume  are 
received  from  the  latter  markets.  They  must  be  shipped  through 
foreign  freight  forwarders  at  considerably  increased  cost,  or 
they  must  be  handed  to  export  commission  houses  when  buy- 
ers in  such  markets  have  any  established  connections  with  such 
houses  in  the  United  States,  as  is  by  no  means  always  the  case. 
IMannfacturers  who  do  not  favor  the  announcem.ent  of  sample 
assortments  believe  rather  in  the  principle  of  urging  the  indi- 
vidual selection  of  samples  of  the  actual  goods  by  the  foreign 
buyer  through  later  correspondence  to  follow  inquiries  first  de- 
veloped by  the  advertisement.  This  involves  the  loss  of  a  little 
time,  the  necessity  for  the  expenditure  of  a  little  thought  in 


ADVERTISING  TO  GET  EXPORT  TRADE         217 

devising  correspondence  effectively  aimed  at  turning  an  inquiry 
into  an  order,  but  it  undoubtedly  has  some  advantages,  as  has 
just  been  suggested. 

Advertising  Prices. — The  question  is  always  a  moot  one — to 
quote  or  not  to  quote  prices  in  the  announcement  in  the  modern 
export  trade  paper.  In  the  present  writer's  opinion,  it  is  never 
wise  to  quote  any  price  in  an  export  advertisement.  If  a  price 
is  quoted,  practically  every  foreign  prospect  who  sees  it  is  certain 
to  assume  that  there  is  a  large  discount  available,  no  matter  if 
we  have  made  an  exceptionally  close  and  absolutely  net  price. 
Other  arguments  referring  to  the  advisability  of  quoting  "one 
price  to  all,"  of  permitting  our  best  or  our  general  trade  prices 
to  go  into  the  hands  of  consumers  and  small  retailers,  will  later 
in  this  chapter  be  quite  thoroughly  discussed.  In  any  event,  the 
quotation  of  a  price  with  all  of  its  uncertainty  cannot  be  an 
effective  appeal  to  foreign  prospects.  The  argument  about  our 
goods  may  be.  The  prospect  will  naturally  be  curious  as  to  how 
much  the  goods  advertised  cost.  It  is  eas}^  enough  for  him  to 
mail  a  post-card  inquiry  to  the  advertiser,  if  his  interest  is  of 
the  sort  we  are  seeking  to  develop  in  our  announcement.  In  the 
advertiser's  correspondence  that  will  follow  the  argument  may 
be  so  set  forth  as  to  sell  the  goods  no  matter  what  their  cost. 

Change  of  Advertising  Copy. — It  is  the  invariable  experience 
of  every  advertiser  who  has  watched  carefully  the  progress  of  his 
efforts  that  one  idea  which  he  may  have  thought  particularly 
brilliant  and  clever  has  failed  absolutely  to  bring  satisfactory 
returns,  while  another  piece  of  copy  by  no  means  the  equal  of 
the  first  in  the  advertiser's  own  estimation,  has  brought  replies 
in  unexpected  volume.  Change  of  advertising  copy  must,  there- 
fore, always  be  considered,  and  this  applies  with  equal  force 
to  export  as  to  domestic  advertising. 

Certainly  changes  of  export  copy  should  not  be  made  too 
frequently.  An  announcement  must  be  given  a  fair  trial  and 
that,  as  we  have  seen  in  the  export  trade,  involves  considerable 
periods  of  time.  It  will  be  remembered,  for  instance,  that  one's 
printed  announcement,  like  his  letters,  cannot  arrive  in  Buenos 
Aires,  Argentina,  or  Sydney,  Australia,  until  thirty  days  after 
the  date  it  has  been  mailed.  Thirt.y  days  are  also  required  for 
inquiries  that  may  be  provoked  to  reach  advertisers.     Since  it  is 


218  PRACTICAL  EXPORTING 

hardly  to  be  expected  that  any  announcement  will  provoke  in- 
quiries the  moment  it  arrives  in  a  given  market,  it  follows  that 
no  replies  whatsoever  are  to  be  anticipated  from  markets  like 
those  within  three  months  from  the  date  of  mailing  of  the  period- 
icals containing  printed  announcements.  Very  likely  much 
more  time  will  be  required.  The  advertiser,  therefore,  cannot 
judge  of  the  effect  of  export  copy  for  several  months  after  its 
publication. 

Writing  in  System  about  export  advertising,  Walter  F.  Wy- 
man,  of  Carter's  Ink  Company,  says:  "Sheer  laziness  is  a 
common  cause  of  the  'business  card'  which  is  overprevalent  in 
foreign  newspapers  as  well  as  magazines.  It  requires  brains  to 
make  a  four-inch  single  column  advertisement  carry  a  real  sales 
appeal,  though  it  is  not  an  impossibility.  To  apply  a  common 
sense  test,  what  manufacturer  would  fail  to  discharge  a  sales- 
man who  spent  twenty  dollars'  worth  of  time  in  visiting  a  possi- 
ble foreign  buyer — and  merely  saying  at  measured  intervals : 
'I  represent  Jones  Mfg.  Company — we  make  shirtings' — and 
then  walking  out!" 

An  Advertising  Campaign  Necessary. — Another  lesson  to  be 
drawn  from  conditions  just  explained  is  that  export  advertising 
should  never  be  an  experiment.  It  should  not  be  adopted  in  the 
first  place,  until  after  careful,  due  consideration.  When  it  is 
adopted,  it  should  be  with  firm  determination  to  carry  out  the 
campaign  proposed  as  a  permanent,  or  at  least  as  a  lengthy, 
business  policy.  It  is  pure  waste  of  money  to  take  up  export 
advertising  for  a  month  or  two  "to  see  what  will  happen,"  and 
then  lay  it  aside  indefinitely. 

ADVERTISING  FOR  GENERAL  PUBLICITY 

American  advertisers  in  general  too  often  neglect  export  ad- 
vertising from  the  point  of  view  of  desirable,  if  not  essential, 
general  publicity.  Some  manufacturers  seem  to  feel  that  since 
they  have  already  succeeded  in  establishing  agencies  in  many,  or 
even  in  practically  all  foreign  markets  where  they  expect  a  con- 
siderable volume  of  business — this  often  after  years  of  effort — 
they  can  now  and  forever  hereafter  neglect  export  advertising  in 
the  trade  paper.  Other  manufacturers  declare  that  they  do  not 
care  for  a  flood  of  inquiries,  but  prefer  to  develop  agencies  and 


ADVERTISING  TO  GET  EXPORT  TRADE         219 

place  their  goods  with  large  distributors  through  traveling  sales- 
men or  by  means  of  direct  correspondence  only.  ^lanufactur- 
ers  of  both  classes  overlook  some  aspects  of  their  own  situation. 

Prestige  in  Foreign  Markets. — It  is  too  often  forgotten  that 
the  very  largest  houses  in  the  United  States,  known  by  name,  at 
least,  in  ever}-  county  and  township  throughout  this  nation,  may 
be  unknown,  possibly  even  unheard  of,  in  many  foreign  coun- 
tries. No  matter  what  the  manufacturer's  name  and  fame  may 
be  here  at  home,  he  has  got  to  begin  anew  when  he  enters  markets 
in  foreign  lands.  Furthermore,  foreign  importers  are  by  no 
means  rare  who  have  had  most  unfortunate  experiences  with 
some  previously  unheard  of  American  concerns  with  whom  busi- 
ness has  been  started.  It  is  undeniable  that  there  really  does 
exist,  in  many  a  foreign  country,  a  well  defined  suspicion  of  new 
American  concerns.  Continuous  advertising  merely  to  impress 
the  trade  of  the  world  with  the  existence  of  a  house  and  the 
virtues  of  its  wares,  for  general  publicity  purposes,  cannot  there- 
fore fail  to  be  helpful.  It  is  valuable  to  a  manufacturer  in  his 
own  trade,  and  it  is  worth  while  in  a  patriotic  way  as  well.  The 
concern  whose  announcements  have  been  seen  for  years  all 
around  the  world  becomes  known  from  that  very  fact  as  an 
"old" — hence  probably  reliable  house. 

Says  ]\Ir.  Wyman  in  his  article  just  quoted :  "  It  is  an  amus- 
ing but  costly  trait  of  the  average  successful  manufacturer  in 
the  United  States  that  he  so  often  considers  his  goods  of  world- 
wide reputation  because  he  has  attained  a  national  distribution 
plus  minor  sales  in  a  few  leading  world  markets.  Too  often  he 
forgets  the  lean  years  here  at  home  while  he  was  making  his 
brands  known  and  winning  the  confidence  of  dealer  and  user, 
and  falsely  assumes  that  the  sale  of  a  dozen  stoves  or  a  gross 
of  hat  pins  in  Japan  makes  his  name  a  household  word  through- 
out Asia." 

Advertising  as  an  Introduction. — Again,  many  a  big  Amer- 
ican manufacturer  has  been  greatly  chagrined  to  find  important 
buyers  in  foreign  countries  who,  if  they  have  ever  heard  his 
name,  labor  under  the  impression  that  he  makes  something  quite 
different  from  his  actual  products.  Traveling  salesmen  who  go 
aboard  to  drum  a  foreign  market  in  many  cases  work  under  a 
genuine  handicap  in  presenting  the  card  of  a  concern  never  be- 


220  PRACTICAL  EXPORTING 

fore  heard  of.  If  the  card,  however,  bears  the  name  of  a  firm 
which  has  been  advertising  for  a  long  time  in  the  modern  export 
trade  paper,  whose  announcements  cannot  fail  occasionally  to 
have  made  some  slight  impression  on  foreign  buyers,  it  is  likely 
that  the  advertiser 's  name  at  least  will  be  remembered,  and  prob- 
able that  the  impression  will  have  remained  that  the  house  now 
personally  introduced  by  a  traveling  salesman  is  a  large  one. 
Advertising,  therefore,  as  a  means  of  introduction  to  prospects 
in  foreign  countries,  must  be  said  to  be  worthy  of  serious  con- 
sideration. 

Once  more  let  us  quote  that  sane  and  helpful  article  in  System : 
"It  is  commonly  asserted  that  no  export  traveler  can  make  ex- 
penses on  his  first  trip.  This  is  an  exaggeration  based  on  the 
fact  that  no  salesman  without  cooperation  from  his  house  can 
hope  for  maximum  sales  when  the  burden  of  introducing  the 
firm,  the  product  and  the  brand,  is  added  to  his  real  work  of 
selling  goods. 

"Advertising  will  help  to  remove  the  necessity  for  the  sales- 
man bearing  such  a  burden.  Whether  it  is  in  San  Francisco  or 
San  Fernandez,  the  attitude  of  a  merchant  or  user  towards  an 
untried  product  which  he  has  seen  advertised  is  quite  different 
from  his  feeling  for  one  of  unknown  parentage.  It  is  not  too 
much  to  claim,  therefore,  that  the  export  advertising  which 
'makes  your  goods  less  apt  to  be  refused  when  offered,'  should  be 
credited  with  the  expense  of  the  'get  acquainted'  trip  it  renders 
unnecessary.  .  .  . 

"As  a  means  of  preparing. a  field  for  later  development  by 
salesmen,  export  advertising  has  considerable  value.  Very 
often  it  is  important  to  have  partial  distribution,  in  order  that 
the  salesman  on  arrival  may  have  a  skeleton  organization  in  a 
dealer  who  carries  a  modest  stock  and  consumers  who  can  be 
used  as  references." 

RESULTS  FROM  EXPORT  ADVERTISING 

It  should  be  urged  that  export  advertisements  be  keyed,  as 
should  a  manufacturer's  catalogues  and  circular  letters.  Of 
course,  a  full  and  careful  record  of  returns  from  advertising 
effort  must  also  be  kept  if  the  advertiser  is  to  have  a  clue  to 
guide  him  as  to  the  efficiency  of  various  mediums  employed,  or 


ADVERTISING  TO  GET  EXPORT  TRADE         221 

as  to  the  quality  of  the  several  kinds  of  advertising  copy  which 
he  may  have  employed. 

One  important  consideration  affecting  results  from  export  ad- 
vertising must  be  remembered.  It  will  not  be  possible  to  record 
a  part — perhaps  a  large  part — of  the  results  secured,  because 
many  orders  will  be  placed  through  American  export  commis- 
sion houses  and  the  original  prompting  of  such  orders  may  never 
definitely  be  traced,  even  if  their  source  be  known.  It  is  only 
fair  to  credit  the  total  volume  of  business  thus  secured,  whose 
origin  is  unknown,  to  the  general  advertising  appropriation. 

Quality  and  Quantity  of  Results. — In  our  consideration  of 
some  features  of  foreign  correspondence  we  have  reached  the 
conclusion  that  it  is  impossible  always  to  judge  of  the  quality  of 
prospects  from  the  letters  that  reach  us.  ]\Iany  a  case  might  be 
instanced  where  actual  business,  and  business  of  really  large 
volume,  has  resulted  from  people  whose  letters  and  even  whose 
personal  appearance  when  we  have  met  them  face  to  face  have 
not  indicated  any  buying  ability  whatsoever.  No  replies  from 
advertising  can  safely  be  disregarded.  If  nothing  else,  there 
are  further  advertising  effects  to  be  impressed  through  replies 
to  people  who,  for  one  reason  or  another,  have  had  enough  in- 
terest in  our  lines  to  write  us  about  them. 

On  the  other  hand,  mere  quantity  of  replies  provoked  by  a 
certain  advertising  copy  is  not  always  to  be  regarded  as  the  ulti- 
mate criterion  of  the  value  of  that  copy.  A  large  number  of 
inquiries  may  be  secured  and  yet  no  definite  orders  develop.  It 
is  to  be  remembered  that  just  as  it  is  the  biggest  houses  which 
are  the  hardest  for  the  salesmen  to  sell,  so  it  is  the  same  ones 
from  whom  replies  to  advertisements  are  drawn  with  the  great- 
est difficulty.  An  introduction  to  prospects  is  what  the  export 
announcement  should  be  aimed  to  secure.  Inquiries  may  be  of 
varying  character  as  well  as  caliber.  Each  should  be  developed 
according  to  its  importance.  Actual  business  getting  is  the  ad- 
vertiser's business,  not  the  publisher's. 

One  of  the  most  incomprehensible  things  in  connection  with 
the  export  business  of  American  manufacturers  is  their  frequent 
neglect  of  foreign  inquiries.  Drawers  full  of  letters  are  found 
unanswered — apparently  because  they  are  inquiries  and  not  or- 
ders.    That  the  one  is  the  practically  indispensable  and  invari- 


222  PRACTICAL  EXPORTING 

able  preliminary  to  the  other  seems  sometimes  to  be  forgot- 
ten. 

Records  of  Inquiries  and  Orders. — Advertising  records 
should  include  not  merely  the  enumeration  of  inquiries  received 
through  a  medium  or  from  any  special  kind  of  copy,  but  should 
further  be  extended  to  show  the  ultimate  business  obtained  in 
the  way  of  definite  orders.  It  is  misleading,  however,  to  charge 
up  against  export  advertising  the  first  result,  in  dollars  and 
cents,  in  the  way  of  orders.  While  it  is  true  that  many  adver- 
tisers for  export  business  have  been  able  to  secure  a  good  deal 
larger  volume  of  actual  orders  in  direct  return  from  their  ad- 
vertising than  the  costs  of  such  advertising  really  warrant,  yet 
the  principle  already  laid  down  should  continue  to  govern  here. 
The  exporter's  effort  in  the  first  instance  is  not  for  a  big  order. 
His  effort  invariably  should  be  to  get  actual  specimens,  many  or 
few,  of  his  goods  into  the  hands  of  possible  buyers,  proving  by 
the  goods  that  they  are  all  that  he  claims  for  them,  are  goods 
which  the  buyers  can  use  profitably.  It  is  by  later  efforts, 
through  intelligent  and  scientific  handling  of  the  trade,  coopera- 
tion, correspondence,  service,  that  the  foundations  of  business 
thus  laid,  should  be  made  to  serve  for  building  up  big,  per- 
manent and  profitable  relations.  The  profits  in  a  business 
through  five,  ten,  or  fifteen  years,  if  that  business  is  intelligently 
cultivated  and  developed,  are  certain  to  offset  many  times  over 
the  comparatively  slight  cost  of  initiating  it. 

EXPORT  CATALOGUES 

Another  form  of  advertising  to  develop  export  trade  must 
here  be  considered— the  export  catalogue,  closely  affiliated  also 
with  export  correspondence.  In  the  term  catalogue  all  kinds  of 
printed  matter  may  be  included,  circulars,  leaflets,  monographs, 
envelope  enclosures,  etc.  All  may  be  of  much  effect  or  of  little 
effect,  depending  in  large  measure  on  the  brains  and  thouglit 
bestowed  upon  their  preparation. 

Catalogues  and  Printed  Circulars. — ^lanufacfurers  are 
sometimes  deterred  from  undertaking  an  active  campaign  for 
export  business  because  of  the  fancied  expense  of  bringing  out 
elaborate  catalogues  in  all  sorts  of  foreign  languages.  There 
is  no  real  basis  for  hesitation  on  this  score.     It  is  not  absolutely 


ADVERTISING  TO  GET  EXPORT  TRADE         223 

essential  at  the  outset  of  an  effort  to  get  export  trade  that  any 
literature  whatsoever  be  prepared  in  other  languages  than 
English.  Probably  the  great  majority  of  successful  American 
exporters  of  to-day  began  their  export  efforts  with  nothing 
more  than  their  regular  American  catalogue.  It  has  already 
been  noted  that  many  people  in  all  countries  read  other  lan- 
guages than  their  own  with  pleasure  and  with  intelligence,  even 
when  they  cannot  speak  or  write  such  other  languages.  It  is 
far  more  important  that  a  would-be  exporter's  letters  be 
couched  in  appropriate  foreign  languages  than  that  his  printed 
matter  be  translated.  It  is,  for  example,  quite  possible  for  him 
to  review  in  a  letter  accompanying  a  catalogue  the  prime  essen- 
tials of  his  selling  argument,  even  of  the  descriptions  of  his 
goods — all  in  the  customer's  language,  although  the  accompany- 
ing catalogue  is  in  English.  However,  the  selfsame  arguments 
that  apply  to  the  translation  of  correspondence  apply  in 
some  measure  also  to  the  desirability  of  having  catalogues 
translated.  Each  manufacturer's  individual  policy  must,  then, 
determine  when  the  point  has  been  reached  that  the  expense  of 
translating  catalogues  becomes  an  unavoidable  or  a  desirable 
charge,  and  how  much  of  an  appropriation  for  that  purpose  is 
necessary.  The  reader  is  referred  back  to  Chapter  V,  de- 
voted to  foreign  correspondence,  for  a  consideration  of  the  use 
of  foreign  languages,  of  translations,  etc.,  which  it  seems  un- 
necessary to  repeat  in  this  place  as  applying  to  catalogues. 

What  Sort  of  Foreign  Catalogues? — Certainly  it  is  far  more 
desirable  to  establish  the  foundations  for  taking  care  of  an  ex- 
port trade  on  a  sound  basis  than  to  neglect  this  necessity  and 
plunge  into  the  printing  of  circulars  in  other  languages.  How- 
ever, when  the  export  department  has  been  thoroughly  well 
organized,  systematized  and  put  in  smooth  running  order,  then 
the  question  of  literature  for  the  development  of  foreign  trade 
requires  attention. 

The  regular  domestic  catalogue  in  the  English  language  may 
sometimes  be  used  without  modification  in  the  beginnings  of  an 
export  campaign.  Occasionally  it  may  be  too  big,  heavy  or 
expensive  to  be  generally  employed  in  working  up  trade  in 
other  countries.  In  such  cases  it  may  be  desirable  to  bring  out 
an  abridged  edition  for  export  trade,  referring  only  to  those 


224  PRACTICAL  EXPORTING 

special  articles  which  are  regarded  as  most  suitable,  or  as  most 
likely  to  appeal  to  buyers  in  other  countries,  including  those 
special  features  which  properly  should  distinguish  an  export 
catalogue  in  English  or  any  language.  Sometimes  the  domestic 
catalogue  is  made  to  do  duty  for  foreign  distribution  by  includ- 
ing a  leaflet  therein  by  way  of  supplement  or  explanation,  either 
in  English  or  in  other  languages.  It  is  all  too  easy  to  waste 
money  in  the  distribution  of  catalogues  abroad  and  hence  the 
first  effort  in  the  preparation  of  foreign  literature  should  be  on 
a  conservative  basis.  Various  economies  that  may  be  affected 
are  suggested  in  the  foregoing  hints.  However,  no  matter 
what  the  first  effort  in  this  direction  may  be,  it  is  certain  that 
ultimately,  with  the  development  of  an  export  business,  with 
encouragement  received  from  many  different  directions,  spe- 
cial literature  both  in  English  and  in  appropriate  languages  will 
become  necessary. 

Foreign  Language  Catalogues. — In  considering  the  prepa- 
ration of  export  catah)gues  in  other  languages  than  our  own  it 
is  probable  that  the  Spanish  language  will  be  that  regarded  as 
of  first  importance.  This  does  not  necessarily  imply  that  trade 
in  Spanish-speaking  countries  will  be  the  largest  or  the  most 
desirable,  but  their  own  language  is  required  by  more  people 
in  such  countries  than  is  the  case  in  most  other  countries  speak- 
ing other  languages.  By  that  is  meant  that  importers  through- 
out Europe  are  much  more  likely  to  be  familiar  with  several 
other  languages  than  their  own  than  are  dealers,  if  not  im- 
porters, in  Spanish-speaking  countries.  Next  in  importance 
so  far  as  languages  are  concerned  would  doubtless  rank  tlie 
French  export  catalogue.  In  Chapter  V,  in  our  discussion  of 
transhitions,  we  have  already  considered  the  different  countries 
to  which  the  several  principal  commercial  languages  of  the 
world  most  effectively  appeal.  Putting  export  catalogues  into 
any  foreign  language  must  depend,  however,  largely  upon  the 
nature  of  the  products  involved  and  the  foreign  countries  where 
such  products  are  expected  to  find  their  largest  trade,  or  which 
it  is  desired  for  other  reasons  especially  to  cultivate. 

The  foreign  language  catalogues  when  prepared  should,  in 
fact  as  well  as  in  name,  be  "special  editions."  A  catalogue  or 
circular    intended    for   distribution    through    Spanish   America 


ADVERTISING  TO  GET  EXPORT  TRADE         225 

should  be  expressed  in  Spanish  in  form  and  terms  best  calcu- 
lated to  appeal  to  buyers  in  those  markets.  Similarly  with 
French,  Portuguese  or  any  other  catalogues.  Each  should  be 
prepared  by  a  specialist  able  to  transmute  the  essential  quali- 
ties of  the  English  original  into  the  requisite  foreign  atmos- 
phere. This  applies  even  to  covers  as  well  as  to  the  contents. 
The  catalogue  may  be  large  or  small,  thick  or  thin,  as  circum- 
stances may  indicate  in  individual  cases.  The  essential  thing 
is  to  ensure  that  it  makes  the  right  sort  of  appeal. 

The  edition  of  an  export  catalogue  should  not  be  limited. 
Some  people  seem  inclined  only  to  make  an  experiment  and 
have  a  hundred  copies  or  so  printed  just  to  see  how  the  trial 
turns  out.  This  seems  a  pure  extravagance.  The  cost  of 
preparation  is  immensely  greater  per  copy.  An  export  cata- 
logue should  not  be  contemplated  at  all  unless  with  the  firm  de- 
termination to  carry  the  campaign  through  vigorously  and 
largely  to  a  profitable  conclusion.  If  worth  doing  at  all  it  is 
worth  doing  right.  No  results  from  any  kind  of  circular 
effort  are  likely  to  result  unless  the  scheme  is  developed  on  an 
extensive  scale. 

Preparation  of  Export  Catalogues. — Printers  are  often  asked 
to  submit  estimates  for  the  complete  production  of  a  catalogue, 
including  the  translation  work  as  well  as  making  cuts,  supply- 
ing paper,  etc.  It  is  not  too  much  to  assert  that  there  is  not  a 
printer  in  the  United  States  who  in  his  own  office  has  any  facili- 
ties for  producing  creditable  translations.  When  this  matter 
is  entrusted  to  a  printer  he  secures  competing  bids  from  sev- 
eral translation  bureaus  or  individuals  and  very  likely  accepts 
the  lowest  price  that  is  made,  irrespective  of  quality  likely  to 
result  in  the  product.  The  translation  is  such  an  important 
matter  that  it  ought  to  have  the  manufacturer's  study  and 
criticism  before  ever  submitted  to  the  printer. 

On  the  other  hand,  it  is  sometimes  suggested  to  manufac- 
turers that  a  special  foreign  language  edition  of  their  cata- 
logue be  prepared  and  printed  in  the  country  where  it  is  ex- 
pected to  be  distributed.  In  spite  of  some  advantages  in  fol- 
lowing this  course  in  certain  countries,  it  is  not  to  be  advised. 
"We  are  quite  justified  in  priding  ourselves  in  the  United  States 
on  the  production  of  the  handsomest,  most  attractive  and  most 


226  PRACTICAL  EXPORTING 

effective  printed  matter  to  be  found  in  any  country.  The  paper 
stock  and  the  half-tone  cuts  that  we  customarily  employ  here 
are  many  degrees  superior  to  anything  of  the  sort  commonly 
used  in  other  countries.  In  fact  much  of  the  more  attractive 
printed  matter  issued  by  Latin-American  houses  is  printed  in 
the  United  States. 

While  it  may  often  enough  be  desirable  to  submit  the  proposed 
translation  of  printed  matter  to  one's  agents  in  countries  where 
it  is  planned  to  distribute  such  literature,  receiving  back  sug- 
gestions and  criticisms  before  going  to  press  with  the  catalogue 
in  the  United  States,  yet  the  work  itself  should  preferably  be 
carried  out  here  and  not  abroad.  The  name  and  address  of 
agents  can  just  as  easily  be  imprinted  here,  if  necessary,  as  could 
be  done  were  the  whole  work  performed  abroad,  or  appropriate 
spaces  can  be  left  for  imprinting  such  or  other  advertisements 
locally,  as  various  agents  may  prefer. 

Except  in  the  case  of  unusually  heavy  catalogues  the  dif- 
ference in  cost  of  mailing  is  so  trifling  that  small  advantage  is 
to  be  secured  by  using  inferior  grades  or  light  weights  of  paper. 
We  have  an  American  fame  to  maintain  in  the  quality  and 
attractiveness  of  our  printed  matter  and  it  will  be  entirely  false 
economy  to  attempt  to  cheapen  our  catalogues  at  the  expense  of 
attractiveness. 

Contents  of  the  Export  Catalogue. — Attractive  in  appear- 
ance as  we  may  make  our  export  catalogues  yet  their  real  effect- 
iveness will  in  the  last  analysis  depend  on  their  contents.  The 
catalogue,  it  has  been  suggested,  is  in  a  sense  a  manufacturer's 
showcase.  In  the  export  trade,  however,  it  must  be  something 
more.  It  must  be  salesman  as  well  as  showcase.  Business  to  be 
obtained  from  a  showcase  alone  is  never  sufficient  to  make  a 
manufacturer  or  merchant  rich.  We  have,  therefore,  in  our  ex- 
port catalogues  to  do  something  more  than  show  pictures  and 
prices  of  our  goods.  We  have  to  couple  with  those  elements  our 
sales  talk.  We  can  depend  to  some  extent  on  our  campaigning 
letters  for  sales  arguments,  but  we  can  say  a  good  deal  more  in 
print  than  we  can  in  typewritten  form.  Moreover,  a  letter  and 
catalogue  under  another  cover  are  frequently  separated  in  the 
mails;  again,  where  the  letter  may  not  be  available  six  months 
from  now,  the  catalogue,  if  of  the  right  sort,  is  sure  to  be  on  file. 


ADVERTISING  TO  GET  EXPORT  TRADE         227 

Every  suggestion,  therefore,  included  in  our  discussion  of  how  to 
sell  goods  by  letter  applies  to  the  preparation  of  the  printed 
catalogue. 

Catalogue  Description  of  Qualities. — First  of  all,  however,  a 
catalogue  must  with  strictest  honesty  describe  qualities  of  the 
goods.  Not  enough  attention  by  any  means  is  paid  to  this  mat- 
ter in  our  domestic  catalogues.  Here  at  home  the  catalogue  is 
often  used  only  as  a  book  of  reference  after  a  buyer  has  seen  and 
inspected  actual  samples  of  the  goods.  This  is  not  possible  in 
all  cases  in  developing  foreign  business.  The  catalogue  is  then 
used  more  often  than  not  to  secure  sample  orders.  It  is  the  one 
thing  which  the  prospect  has  to  reh'  ujoon,  except  in  those  com- 
paratively few  instances  where  samples  of  inconsiderable  value 
are  submitted  along  with  catalogue.  Usually  it  is  not  possible 
for  a  buyer  to  inspect  an  actual  sample  of  an  office  desk,  an  en- 
gine or  piece  of  machinery,  or  various  kinds  of  boots  and  shoes. 
He  has  only  the  catalogue  to  look  to,  and  an  engraving  or  a  half- 
tone cut  of  a  $15  desk  looks  exactly  like  a  $50  desk,  or  a  $1  shoe 
exactly  like  one  of  a  $3  shoe. 

In  the  United  States  buyers  make  allowance  for  a  certain  de- 
gree of  boast  and  exaggeration  in  our  advertising  literature. 
They  do  not  make  the  same  allowances  in  foreign  countries. 
Foreign  buyers  are  disposed  to  expect  that  every  printed  word 
will  be  the  exact,  plain,  unvarnished  truth.  They  will  depend 
upon  it  when  they  place  orders,  and  they  will  show  something 
more  than  dissatisfaction  if  the  goods  which  are  shipped  do  not 
substantiate  every  smallest  claim  that  is  made  for  them. 

The  great  thing  for  us  to  bear  in  mind  in  the  use  of  catalogues 
is  that  we  are  not  merely  seeking  to  secure  a  sample,  trial  or 
initial  order.  We  are  trying  to  persuade  our  prospects  to  get 
into  their  possession  actual  specimens  of  our  goods,  usually 
doubtless  in  the  way  of  orders  for  small  quantities,  in  order  that 
after  they  have  seen  what  the  goods  themselves  really  are,  numer- 
ous and  regular  repeat  orders  will  follow. 

We  have,  of  course,  in  our  catalogues  to  tempt  these  original 
orders  with  such  appealing  language  as  we  can  employ,  but  that 
appeal  must  be  modified  by  a  strictly  honest  description  of  the 
goods,  their  composition  and  their  qualities.  It  will,  beyond  any 
doubt  at  all,  be  found  highly  desirable  for  the  manufacturer  of 


228  PRACTICAL  EXPORTING 

"shoddy"  boots  and  shoes  to  indicate  in  his  catalogue  that  his 
cheapest  grades  are  made  with  paper  or  leather-board  or  com- 
position soles,  heels,  counters  or  what-not,  that  in  consequence 
that  particular  grade  is  not  to  be  recommended  for  wear  in  a 
damp  country  or  during  the  rainy  season  in  tropical  countries. 
The  manufacturer  will,  as  a  matter  of  course,  point  out  the  real 
usefulness  of  goods  of  this  character  and  advise  when  and  how 
they  should  be  bought,  sold  and  worn.  He  may  have  a  little 
timidity  about  exposing  the  composition  or  construction  of  his 
goods  in  print,  but  if  he  does  it  intelligently  the  results  in  the 
long  run  are  bound  to  be  to  his  profit. 

Catalogues  Must  Include  Selling-  Arguments. — The  selling 
argument  in  the  export  catalogue  will  vai*y,  of  course,  according 
to  the  individual  line  involved.  The  great  principle,  as  in  letter 
writing,  is  the  differentiation  of  the  goods,  the  emphasis  placed 
on  their  individual  qualities,  of  how  they  are  different  from  or 
better  than  competing  goods  or  any  other  goods  offered  for  the 
same  purpose.  Braggadocio  and  boasting  are  to  be  avoided,  but 
sometimes  a  good  deal  of  the  desired  impression  as  to  size,  im- 
portance and  solidity  can  be  accomplished  by  an  actual  de- 
scription of  a  manufacturer's  works  and  of  the  processes  em- 
ployed in  making  the  goods. 

In  the  letter-press  of  his  catalogue,  perhaps  in  an  introduction, 
the  manufacturer  of  large  production  can  well  emphasize  its  ad- 
vantages and  economies  (but,  again,  never  the  "biggest  in  the 
world").  He  can  tell  of  some  of  the  special  machinery  that  he 
employs,  or  that  he  has  perhaps  invented,  to  accomplish  special 
results  in  his  goods;  he  can  describe  methods  of  manufacture 
that  are  peculiar  to  his  works,  that  are  not  employed  by  his 
competitors,  with  resulting  quality  of  the  finished  product.  He 
can  tell  of  his  designs,  of  their  originality  and  novelty,  of  how 
they  are  superior  for  certain  purposes  to  any  others,  or  hand- 
somer, or  he  can  lay  emphasis  upon  the  remarkable  finish  of  his 
goods  as  commending  them  to  discriminating  buyers.  He  can 
tell  of  the  work  accomplished  by  the  machinery  or  apparatus 
he  is  trying  to  sell  as  greater  in  volume,  or  better  in  quality, 
or  more  economical  in  process,  than  other  methods.  Doubtless 
every  one  of  these  and  other  innumerable  arguments  are  actually 
employed  in  selling  goods  by  word   of  mouth;  in  the  export 


ADVERTISING  TO  GET  EXPORT  TRADE         229 

catalogue  they  must  be  put  in  black  and  white,  as  the  salesman 
to  accompany  the  showcase. 

Americanisms  to  Be  Avoided. — Not  only  must  swagger  and 
boastfulness  be  avoided,  but  also  strictly  local  American  usage 
of  words  and  names  and  all  technical  descriptions,  above  all  the 
use  of  American  slang  and  of  the  catch  phrases  which  are  so 
common  among  us.  It  is  impossible  to  translate  into  another 
language  such  common  advertising  phrases  as  "there's  a  reason," 
"  it 's  a  korker. ' '  A  writer  in  the  American  Exporter  a  year  or 
two  ago  explained  the  difficulties  of  a  translator  in  trying  to 
put  into  Spanish  the  cover  legend  of  a  lamp  manufacturer's 
catalogue  which  in  English  was  called  "Cold  Blast  Book." 
Some  manufacturers  have  been  known  to  express  surprise  and 
dismay  when  they  found  that  a  bit  of  poetry-  used  in  their  Eng- 
lish catalogue  could  not  be  translated  into  French  or  German 
poetry.  Allusions  to  sports,  especially  baseball,  are  meaning- 
less to  people  in  many  other  countries.  The  Latin  races  espe- 
cially are  not  by  any  means  the  devotees  to  athletics  that  are 
Americans  and  English.  Baseball  is  so  distinctly  American 
that,  except  at  isolated  points,  it  is  hardly  known  in  other 
countries.  In  this  same  general  connection  we  may  note  the 
remarks  of  one  of  the  oldest  and  most  experienced  American 
manufacturers  of  agricultural  implements,  A.  B.  Farquhar,  in 
a  report  of  the  committee  on  foreign  trade  of  the  National 
Vehicle  and  Implement  Association. 

"To  avoid  losses  from  wasted  effort  in  advertising,  always 
remember  that  the  Latin-American  mind  is  totally  impervious 
to  anything  like  a  joke  of  the  kinds  that  are  specially  in  vogue 
in  this  country.  We  are  told  of  pictures  representing  a  snow- 
bird drawing  a  plow,  a  rake  pulled  by  a  tiger,  etc.,  sent  abroad 
and  bringing  the  advertiser  no  sales  because,  it  is  explained,  im- 
plements so  propelled  could  be  of  no  use  in  countries  where  only 
oxen  or  horses  are  used  for  such  purposes.  A  case  is  also  re- 
ported of  a  circular  that  advertised  buggies  but  failed  to  sell 
any,  because  the  foreigner  suspected  something  crooked  about 
several  widely  different  prices  being  set  on  vehicles  whose  pic- 
tures looked  all  alike. ' ' 

Catalog-uing:  Each  Article. — The  introduction  to  the  export 
catalogue  may  include  many   general   arguments   for  the   line 


230  PRACTICAL  EXPORTING 

illustrated  and  described  in  succeeding  pages.  It  should  be  as 
strong  and  forceful  as  possible  to  make  it,  and  thoroughly  indi- 
vidualized, putting  maker  and  goods  in  a  class  by  themselves. 
But  in  addition  something  more  is  necessary  in  connection  with 
each  separate  article  referred  to.  Each  one  must  be  illustrated, 
and  if  necessary  from  several  points  of  view,  in  order  to  give 
an  adequate  idea  of  its  appearance,  of  its  functions  or  what-not. 
Beneath  each  cut  should  appear  the  full  description  of  the 
article,  what  it  is  for,  how  it  works,  with  arguments  for  its 
peculiar  advantages,  all  in  simple,  elementary  language,  as 
though  the  prospective  reader  had  never  seen  or  heard  of  any- 
thing like  it  before.  Yet  the  advantages  of  the  article  in  com- 
petition with  other  goods  must  have  especial  emphasis  laid  on 
them. 

Furthermore,  in  connection  with  the  description  of  each  article 
there  should  be  code  words  for  use  in  cable  correspondence,  to 
be  assigned  if  necessary  to  each  different  size  or  variation  or  com- 
bination. It  should  be  explained  how  the  goods  are  packed  or 
how  many  to  a  case,  what  are  the  staple  quantities  in  which 
orders  are  usually  placed  or  are  expected  to  be  placed. 

Dimensions  of  the  article  should  be  exact,  as  made,  that  is 
usually  in  English  feet  and  inches  or  with  approximate  metric 
equivalents  following  in  -  brackets.  Metric  dimensions  alone 
ought  never  to  be  given  unless  the  article  is  originally  made  to 
metric  scale.  A  %-inch  pipe  should  not  be  called  "19  mm." — 
it  should  be  described  "%-inch  (approximately  19  mm.)." 
Whenever  dimensions  or  sizes  are  an  important  feature  of  a 
catalogue  it  is  well  to  include  as  a  supplement  a  page  or  two 
of  metric  conversion  tables,  metric  into  English  and  English 
into  metric,  giving  exact  equivalents  carried  out  to  fine  fractions 
and  decimals.  Incidentally,  it  may  here  be  noted  that  com- 
mon indications  of  feet  and  inches  are  to  be  avoided  as  is  everj^ 
abbreviation.  Do  not  write  or  print  *'3'  6"" — spell  it  out,  "3 
feet,  6  inches." 

Weights  and  measurements  of  the  goods  as  packed  and  pre- 
pared for  export  shipment  should  be  given,  in  order  to  assist 
the  foreign  buyer  in  estimating  the  cost  of  the  goods  as  he  will 
ultimately  receive  them  after  having  paid  ocean  freights  and 
«ustom  house  duties.     The  metric  equivalents  of  weights  should 


ADVERTISING  TO  GET  EXPORT  TRADE         231 

be  giveu,  that  is,  net  and  gross  iii  kilograms,  but  this  is  not 
necessary  in  the  case  of  the  cubic  measurements  of  export  cases, 
since  ocean  steamships  usually  base  their  rates  on  measurements 
in  feet  and  inches. 

Somewhere  in  the  course  of  machinery,  automobile  and  similar 
catalogues,  either  in  a  separate  division  or  in  connection  with 
each  item,  there  should  be  given  full  and  elaborate  lists  of  re- 
pair parts  with  names,  cuts  and  other  forms  of  identification. 
In  some  instances  it  will  often  be  found  highly  desirable  to  quote 
inclusive,  lot  prices  on  special  assortments  of  those  spare  parts, 
or  extra  parts,  which  it  has  been  found  in  the  course  of  expe- 
rience are  most  frequently  needed,  and  urge  their  purchase  for 
the  user's  own  advantage. 

Prices  and  Discount  Sheets.— Perhaps  the  most  serious  ques- 
tion in  connection  with  the  preparation  of  catalogues  is  that  re- 
garding the  prices  that  are  to  be  quoted.  We  have  to  remember 
that  our  catalogues  may  go,  by  accident  if  not  intention,  into  the 
hands  of  all  sorts  of  people — wholesaler,  retailer,  ultimate  con- 
sumer. The  general  principles  underlying  the  quotation  of 
prices  in  the  export  trade  must  be  reserved  for  discussion  under 
another  heading.  Meanwhile  it  should  be  observed  that  a  great 
injustice  may  be  done  to  wholesale  distributors,  jobbers,  or 
others  who  handle  goods  for  re-sale,  if  catalogue  prices  are  so 
made  as  to  betray  their  profits  to  their  legitimate  customers. 
Instead  of  promoting  the  interest  of  those  whose  trade  is  most 
desired  the  catalogue,  if  not  wisely  prepared,  may  actually  in- 
jure those  interests.  It  would  seem  to  follow  that  the  catalogue 
itself  should  contain  no  printed  prices  whatsoever,  unless  those 
prices  are  subject  to  an  extremely  liberal  discount,  say  anywhere 
from  25  per  cent,  to  80  per  cent.  In  fact,  it  is  by  some  manu- 
facturers thought  wise  in  their  export  relations  to  make  an  en- 
tirely different  set  of  list  prices;  that  is,  when  for  domestic 
trade  they  name  what  is  practically  a  net  price,  for  the  export 
trade  another  and  much  higher  list  price  is  quoted  subject  to 
liberal  discount,  as  has  just  been  suggested. 

Inasmuch  as  our  object  is  thus  to  endeavor  to  protect  whole- 
sale customers,  it  is  clear  that  no  discounts  or  at  least  none  but 
purely  nominal  discounts  must  be  named  in  the  pages  of  the 
catalogue  itself.     It  is  customary,  in  order  to  advise  those  whole- 


232  PRACTICAL  EXPORTING 

sale  or  other  important  merchants  from  whom  one  most  de- 
sires orders,  either  to  quote  net  prices,  or  discounts  applying 
to  current  list  prices,  in  a  separate  price  or  discount  sheet,  which 
may  be  included  in  some  copies  of  the  catalogue  sent  abroad  but 
not  in  others.  In  fact  some  manufacturers  have  two  such  sepa- 
rate lists,  or  inserts,  one  quoting  discounts  applying  to  retail 
dealers,  the  other  quoting  an  extra  discount  over  and  beyond  the 
retail  quotation,  which  extra  discount  ajDplies  only  to  certain 
selected  customers  who  are  regarded  as  wholesalers  or  in  a  posi- 
tion to  deserve  best  prices.  A  concrete  illustration  may  help  in 
understanding  this  theory. 

Manipulation  of  Discounts. — A  prominent  manufacturer  of 
jewelry,  in  a  separate  price  list  accompanying  his  export  cata- 
logue, prints  list-prices  applying  to  each  item,  on  which  he  is 
privately  prepared  in  case  of  need  to  offer  a  maximum  discount 
of  40  per  cent.  Under  the  head  of  terms,  in  an  appropriate 
page  of  this  price  list,  he  prints  a  discount  of  10  per  cent,  apply- 
ing to  prices  given.  He  encloses  with  the  price  list  and  cata- 
logue, when  sent  to  large  dealers  or  to  the  general  run  of  the 
wholesale  trade,  a  separate  leaflet  advising  that  the  wholesale  dis- 
count from  the  printed  list  price  is  25  per  cent,  superseding  the 
10  per  cent.,  printed  in  list  for  popular  consumption.  In  his 
circular  letters  accompanying  these  catalogues,  when  they  are 
distributed  to  a  general  mailing  list,  this  manufacturer  writes 
that  he  is  anxious  to  secure  sample  orders  at  the  favorable  rate 
of  discount  named  to  the  wholesale  distributors,  is  confident  that 
the  goods  and  qualities  at  the  low  prices  named  will  result  in 
developing  a  mutually  satisfactory  trade  and  that  it  is  not  im- 
possible that  with  the  development  of  business  relations  after  the 
first  start,  with  the  growth  in  volume  of  the  orders,  with  pos- 
sible later  calculations  on  the  basis  of  quantities,  the  raw  ma- 
terial market,  etc.,  he  may  very  likely  be  able  to  offer  still  more 
favorable  discounts. 

His  effort  is  to  induce  sample  orders  and  he  evidently  then 
depends  upon  a  study  of  the  bu.ying  capacity  of  houses  who  have 
thus  made  a  start  with  him,  of  their  rating  and  general  com- 
mercial character,  to  enable  him  to  follow  them  up  and  secure 
the  maximum  of  business  from  them  by  the  ultimate  quoting  of 
the  very  best  prices  he  can  figure.     This  mainifacturer's  line  is, 


ADVERTISING  TO  GET  EXPORT  TRADE         233 

of  course,  not  a  staple  line  and  tlie  difference  between  the  25  per 
cent,  discount  which  he  quotes  generally  to  wholesalers  and  the 
maximum  40  per  cent,  which  he  can  ({uote  ultimately,  or  in  case 
of  necessity,  is  no  more  than  the  difference  in  price  between  his 
goods  and  many  goods  of  competitors.  It  is  b}-  no  means  suf- 
ficient to  deter  a  really  interested  buyer  from  placing  a  sample 
order  of  comparatively  insignificant  value. 

To  these  observations  it  may  be  added  that  in  catalogues  pre- 
pared essentially  for  consumer  distribution,  for  the  purpose  of 
general  publicity,  or  of  developing  interest  in  a  given  locality 
in  a  certain  line  of  goods  already  on  sale  at  one  or  at  many  lead- 
ing local  establishments,  in  such  catalogues  no  prices  whatever 
should  be  printed  unless  under  advice  and  instructions  from 
local  agents. 

To  Facilitate  Calculation  of  Delivered  Costs. — In  making  any 
catalogue  prices  with  an  accompanying  discount  sheet,  the  ob- 
ject sought  is  to  put  the  customer  in  a  position  to  place  orders 
intelligently,  that  is,  to  know  or  to  estimate  closely  what  the  cost 
of  the  goods  will  be  when  landed  at  his  port.  Prices  and  dis- 
counts must,  therefore,  be  clear  and  unmistakable  and  every 
necessary  detail  must  accompany  them.  For  example,  it  must 
be  made  plain  just  where  delivery  is  made,  whether  f .  o.  b.  fac- 
tor}^, freight  paid  to  New  York,  or  f.  o.  b.  steamer,  and  what 
extras,  if  any,  the  customer  will  have  to  pay,  with  a  statement 
of  the  approximate  cost  of  such  extras.  If  charges  for  packing 
are  included  in  prices,  as  they  usually  ought  to  be,  that  fact 
should  be  stated;  if  packing  is  not  included  then  the  approxi- 
mate cost  must  be  given,  perhaps  of  various  kinds  of  extra  pack- 
ing which  may  sometimes  be  asked  or  be  thought  advisable  in 
certain  eases,  all  to  be  carefully  described.  If  railway  freights 
are  not  included  in  prices  and  if  there  is  to  be  a  charge  for 
cartage  from  arriving  railway  station  to  outgoing  ocean  steam- 
ship at  port  of  sailing,  then  these  costs  should  be  approximated 
for  the  sake  of  putting  prospects  in  a  position  at  least  to  estimate 
with  some  intelligence  the  actual  landed  cost  of  the  goods  to 
them. 

Changing  Prices. — Another  advantage  of  quoting  liberal  list 
prices  is  that  it  is  then  much  easier  controlling  fluctuations  in 
quotations  as  they  become  necessary  by  varying  the  discount 


234  PRACTICAL  EXPORTING 

quoted  instead  of  the  list  prices,  which  always  ought  to  be  held 
as  stable  as  possible.  In  this  same  connection  it  should  never 
be  overlooked  that  when  a  change  in  quotation  becomes  neces- 
sary then  prompt  notice  of  the  new  quotations  should  be  for- 
warded to  everybody  who  has  ever  before,  or  at  least  within  two 
or  three  years,  received  quotations  on  the  old,  superseded  basis. 
No  one  should  be  forgotten  in  these  new  quotations,  for  one  can 
never  tell  when  orders  are  likely  to  materialize  from  sources  half 
forgotten.  The  manufacturer  should  as  a  rule  hold  himself  re- 
sponsible for  filling  all  orders  received  at  old  quotations  until 
sufficient  time  has  elapsed  for  new  quotations  to  arrive  in  the 
hands  of  his  customers. 

In  the  export  trade  changes  in  price  should  be  made  as  seldom 
as  possible.  Foreign  buj'ers  find  it  a  distinct  facility  to  the 
maintenance  of  a  steady  business  to  know  that  they  can  depend 
upon  the  prices  they  have  to  pa}^  and  not  be  forced  to  order 
blindly,  never  knowing  whether  their  orders  at  old  limits  are 
going  to  be  executed,  or  whether  if  they  place  themselves  at  the 
manufacturer's  mercy,  new  orders  will  not  cost  them  a  good  deal 
more  than  they  have  former]y  paid. 

Prices  in  Foreign  Money. — Some  manufacturers  believe  it 
desirable  to  indicate  in  their  catalogues  the  equivalent  in  cur- 
rencies of  other  countries  of  their  list  prices  in  American  dollars 
and  cents.  This  may  be  a  help  to  some  prospects  who  are  not 
familiar  with  the  values  of  our  money,  but  in  principle  any  such 
merchants  will  be  of  small  caliber,  usually  those  not  accustomed 
to  doing  any  import  business  themselves.  Probably  all  large  or 
frequent  importers  of  goods  in  any  country  of  the  world  are 
quite  able  to  figure  for  themselves  the  required  equivalents  of 
dollars  and  cents.  However,  if  it  is  thought  desirable  for  any 
reason  to  include  with  quotations  in  our  own  money  those  in 
foreign  currencies,  such  equivalents  should  be  restricted  at  most 
to  the  principal  international  currencies,  namely,  pounds  sterl- 
ing, and  gold  francs,  and  it  would  be  well  to  indicate  unmis- 
takably the  fact  that  these  equivalents  are  approximate  and 
that  tlie  goods  will  be  invoiced  in  dollars  and  cents.  It  should 
be  remembered  that  we  are  now  discussing  catalogue  and  price- 
list.  Srpecial,  written,  individual  quotations  may  be  made  as 
circumstances  indicate  as  most  effective  or  profitable. 


ADVERTISING  TO  GET  EXPORT  TRADE        235 

If  it  is  desired  for  any  reason  to  quote  only  in  foreign  cur- 
rency (a  proceeding  of  doubtful  advantage  in  a  catalogue)  then 
the  conversion  of  current  prices  in  dollars  into  these  other  for- 
eign currencies  should  be  made  in  general  or  what  we  have 
already  called  "even  money"  terms.  Thus,  the  equivalent  of 
say  $2.25  should  be  expressed  as  approximately  9s.  6d.  instead 
of,  say,  9s.  4V2d.  In  francs  the  same  sum  should  be  approxi- 
mately as  Fes.  11.75  or  even  Fes.  12  instead  of,  say  Fes.  11.70, 
becau.se  the  amounts  suggested  as  preferable  are  those  which  in 
the  other  currencies  may  be  regarded  as  the  same  sort  of  "even 
money"  quotation  as  our  $2.25  instead  of  $2.24.^ 

Printed  Terms  of  Payment. — Full  explanation  of  terms  of 
payment  should  also  be  included  in  the  catalogue,  or  better,  in 
the  accompanying  price  or  discount  sheet.  Whatever  may  be 
done  in  correspondence,  that  is,  in  real  or  imitation  personal 
letters  addressed  to  prospects,  the  terms  that  are  named  in 
printed  fashion  should  provide  strictly  for  cash  or  guaranteed 
payments  before  shipment  of  the  goods.  No  other  general  terms 
ought  ever  to  be  made. 

In  quoting  such  terms  in  printed  form  for  general  distribu- 
tion they  may  be  put  briefly  and  formalh',  but  it  is  usually  worth 
while  explaining  at  a  little  length  how  the  terms  demanded  may 
be  met.  The  manufacturer  may  say  that  orders  may  be  trans- 
mitted by  customers  through  their  usual  buying  agents  in  the 
United  States  or  any  reputable  export  commission  house  in  this 
country,  or  in  default  of  so  doing  orders  will,  if  necessary,  be 
executed  direct  for  the  account  of  the  customer  providing  he 
will,  in  the  case  of  small  amounts,  remit  draft  on  American 
banking  house  with  his  order.  Or,  again,  if  preferred  (the 
catalogue  may  point  out),  the  customer  may  for  his  own  pro- 
tection ask  his  local  bankers  to  open  a  credit  with  their  New 
York  banking  correspondents  in  favor  of  the  manufacturer  for 
the  full  amount  involved  (sometimes  a  fairly  large  part  of  it 
only  is  demanded  in  advance,  as  a  "guaranty").  Customers 
should  be  asked  to  give  instructions  that  such  a  credit  be  con- 
firmed by  New  York  bankers  to  the  manufacturers,  for  payment 
against  delivery  of  ocean  bills  of  lading,  etc.,  proving  actual 

1  Naturally  the  same  liberality  in  quoting  prices  in  foreign  terms  can- 
not apply  in  the  case  of  small  units  quoted  at  home  at  only  a  few  cents. 


236  PRACTICAL  EXPORTING 

shipment.  These  terms,  it  may  be  stated,  are  obviously  neces- 
sary in  the  case  of  transactions  with  new  customers  and  will  be 
recognized  as  just  and  equable,  protecting  both  buyer  and  seller. 
Letters  addressed  to  prospects  may,  of  course,  amplify  such  ex- 
planations of  terms,  or  suggest  if  not  actually  oft'er  modifica- 
tions as  circumstances  in  individual  cases  may  seem  to  indicate 
desirable. 

Our  customary  "cash  discounts"  should  never  be  offered. 
If  an  inducement  to  pay  cash  before  shipment  is  thought  neces- 
sary then  a  "special  extra"  discount  may  be  named  by  letter. 
Such  American  terms  as  "5  per  cent,  ten,  4  per  cent,  thirty,  net 
sixty  days, ' '  have  no  place  in  export  trading,  should  be  studiously 
avoided,  as  we  shall  understand  the  better  the  farther  we  go 
into  the  details  of  this  business.  The  manufacturer  who  cata- 
logues his  goods  "less  2  per  cent,  cash  in  ten  days,  f.o.b. 
Pittsburgh"  betrays  his  inexperience,  does  not  encourage  confi- 
dence— if  he  gets  orders,  does  not  get  so  many  as  he  ought. 

Distribution  of  Catalogues. — Catalogues  for  general  distribu- 
tion will  usually  follow  the  course  of  circular  letters  addressed 
to  mailing  lists,  as  has  already  been  discussed.  Needless  to 
say,  in  the  ease  of  catalogues  in  other  languages,  the  same  care 
must  be  exercised  in  putting  a  catalogue  in  a  given  language  into 
markets  where  that  language  is  spoken,  as  is  necessary  in  the 
despatch  of  letters.  A  catalogue  in  the  Spanish  language  ought 
not  to  be  sent  to  Jamaica  or  Java.  This  caution  seems  entirely 
superfluous,  but  it  is  a  curious  fact  that  there  actually  exist 
manufacturers  who  labor  under  the  impression  that  "Spanish" 
is  suitable  for  all  "foreign"  countries.  This  criticism  is  nearly 
as  frequent  as  the  other,  that  English  catalogues  are  made  to  do 
duty  in  Spanish-speaking  Latin  America. 

No  harm  is  ever  done  by  placing  copies  of  catalogues  both  in 
English  and  in  appropriate  local  languages  in  American  con- 
sulates throughout  the  world.  In  most  of  these  offices  an  ef- 
fort is  made  to  maintain  a  catalogue  file  of  American  manu- 
factured goods  for  the  convenience  of  local  callers  seeking  in- 
formation about  our  goods,  or  for  the  consul's  assistance  in 
replying  to  inquiries  for  our  goods  that  reach  him  from  mer- 
chants in  his  district.  Actual  orders  may  sometimes  result  in 
consequence;   but  in   principle  large  buyers  do  not  go   to   an 


ADVERTISING  TO  GET  EXPORT  TRADE         237 

American  consulate  in  search  of  information.  They  have 
plenty  of  it  thrown  down  upon  their  desks  by  every  arriving 
mail/ 

Follow-up  Trade  Literature. — Just  as  a  follow-up  system  of 
circular  letters  addressed  to  foreign  prospects  is  always  desir- 
able, so  also  there  may  be  prepared  a  follow-up  system  of  litera- 
ture to  accompany  such  letters.  Such  a  system  may  include, 
for  example,  a  general  catalogue  and  a  set  of  leaflets,  folders  or 
envelope  enclosures,  each  one  of  which  may  set  forth  as  strik- 
ingly and  as  strongly  as  possible  the  selling  talk  regarding  a 
special  article  or  a  specific  quality  of  an  article.  The  object  of 
such  literature  should  be  to  tempt  inquiries  for  further  par- 
ticulars, or  if  possible  orders  for  actual  samples,  thus  giving  the 
manufacturer  an  opening  for  new  correspondence,  a  lead  which 
he  should  follow  to  the  limit.  Reliance  should  never  be  placed 
on  a  single  letter  or  catalogue,  no  matter  whether  big  and  ex- 
pensive or  small  and  cheap.  It  should  not  be  expected  that 
large  orders  will  immediately  result.  If  the  subsequent  corre- 
spondence, provoked  by  curiosity  or  interest  aroused  by  the  ad- 
vertising literature  adroitly  devised  for  this  purpose,  is  prop- 
erly handled,  then  the  anticipated  large  business  will  certainly 
follow,  of  sufficient  volume  and  profit  to  warrant  all  the  original 
investment  and  effort. 

.  Separate  leaflets  or  sometimes  separate  pages  from  a  catalogue, 
each  dealing  only  with  one  specialty,  may  also  be  found  useful 
by  one's  foreign  agents  to  whom  they  may  be,  on  request,  sup- 
plied in  quantities  for  local  distribution,  possibly  bearing  the 
agent's  own  imprint.     However,  it  is  generally  preferable  for 

1  In  tliis  regard  a  traveler  not  long  ago  wrote  to  the  American  Exporter 
from  South  America:  "However  eager  the  American  consul  may  be  to  dis- 
play the  catalogues,  the  local  merchant  does  not  get  into  the  habit  of  going 
to  the  consulate  when  he  wants  to  consult  a  catalogue.  Merchants  abroad 
must  he  reached  at  their  offices  by  periodicals  and  circulars.  It  is  very 
rarely  that  they  are  so  eager  for  information  that  they  will  take  the  trouble 
to  go  to  the  American  consulate  to  see  if  a  catalogue  is  on  hand. 

"It  is  a  very  small  expense  for  a  manufacturer  to  send  his  catalogue  to 
all  the  American  consulates,  certainly  no  harm  is  done,  and  sometimes 
orders  will  result  from  tliis  source;  but  some  manufacturers  seem  to  think 
that  if  the*'  send  their  catalogues  to  American  consulates  they  have  pretty 
thoroughly  covered  the  foreign  field.  They  have  covered  it  about  as  thor- 
oughly as  though  they  sent  their  catalogues  to  chambers  of  comraerca 
throughout  the  United  States  and  not  to  individual  merchants." 


238  PRACTICAL  EXPORTING 

the  manufacturer  to  devise  his  own  advertising  literature  pri- 
marily for  his  own  purposes  in  seeking  to  enlist  the  interest,  in- 
quiries or  orders  of  the  foreign  concerns  whom  he  addresses. 
When  so  prepared  such  literature  is  likely  to  be  of  somewhat 
different  character  from  that  suitable  for  the  agent's  individual 
use  locally,  A  good  deal  of  effect  is  likely  to  be  lost  if  the  manu- 
facturer, in  preparing  such  literature,  forgets  its  prime  purpose 
and  tries  to  make  it  suitable  for  several  different  kinds  of  uses. 

Foreign  Restrictions  on  Catalogues. — No  catalogues  or  adver- 
tising literature  of  any  sort  should  ever  be  enclosed  with  ship- 
ments of  goods  unless  customers  specifically  request  so  doing. 
There  are  many  reasons  for  this.  In  some  countries  the  import 
duties  on  catalogues  or  printed  matter  in  general  are  consider- 
ably higher  than  rates  of  duty  on  the  merchandise  with  which 
they  may  be  included  and  if  catalogues  are  placed  in  the  same 
case  with  the  merchandise,  so  doing  may  increase  largely  the 
duties  that  must  be  paid  on  the  whole  case.  Again,  large  im- 
porters frequently  order  goods  not  for  their  own  use  or  their 
own  stock,  but  to  be  transferred  intact  directly  to  their  local 
customers.  Sometimes  these  importers  are  not  anxious  that 
their  customers  should  know  any  more  than  is  necessary  about 
the  origin  of  the  goods.  They  are  seldom  anxious  that  their 
customers  should  have  an  opportunity  of  learning  the  manu- 
facturer's prices,  and  if  a  liberal  supply  of  advertising  matter  is 
placed  in  cases  which  upon  arrival  are  immediately  turned  over 
to  such  customers,  then  the  importer  who  has  bought  and  paid 
for  the  goods  is  not  likely  to  be  highly  pleased. 

For  these  and  other  reasons  if  it  is  desired  to  send  a  quantity 
of  advertising  matter  to  a  customer  when  shipment  of  goods  is 
being  made,  it  is  usually  preferable  to  make  a  special  case  of 
such  advertising  matter  instead  of  including  it  in  cases  con- 
taining the  merchandise  itself.  This,  however,  will  involve 
the  customer  in  considerable  expense — for  ocean  freight,  land- 
ing and  custom  house  charges,  etc.,  and  in  general  it  is  not  worth 
while  attempting  to  forward  a  large  supply  of  advertising  mat- 
ter unless  at  the  suggestion  and  by  the  instructions  of  one's  cus- 
tomers. 

Both  in  Australasia  and  in  South  Africa  a  duty  is  imposed 
on  foreign  printed  matter.     This  is  intended  as  a  measure  of 


ADVERTISING  TO  GET  EXPORT  TRADE        239 

protection  to  the  interests  of  local  printers  and  was  primarily 
due  to  the  practice  of  large  local  concerns  of  getting  their  own 
catalogues  and  their  advertising  matter  printed  abroad  rather 
than  at  home.  The  fact  of  the  existence  of  such  duties  must 
not  be  forgotten  by  American  manufacturers,  who  must  eitlier 
forward  catalogues  to  these  markets  with  discretion  and  in 
limited  amounts  by  any  one  mail,  or  must  make  arrangements 
for  the  local  payment  of  the  required  duties  at  the  other  end. 
Otherwise  the  prospects  whom  they  address  will  be  called  upon 
to  pay  tliese  duties  and  will  not  be  particularly  delighted  thereat, 
especially  if  the  catalogues  are  sent  without  their  knowledge  or 
consent. 

The  regulations  in  force  in  the  Union  of  South  Africa  have 
thus  been  officially  stated  : 

"The  Government  of  the  Union  of  South  Africa  notify  in 
connection  with  the  tariff  of  custom  duty  on  advertising  matter, 
including  catalogues,  price  lists,  almanacs,  calendars,  labels, 
posters  and  show  cards,  that  when  any  of  the  above  named  items 
are  sent  to  any  person  or  firm  in  the  Union  of  South  Africa 
through  the  medium  of  the  post  office  the  duty  payable  thereon 
may  be  prepaid  by  means  of  stamps  affixed  .to  each  separate  let- 
ter, packet  or  parcel.  Stamps  of  various  denominations  may  be 
purchased  at  the  office  of  the  High  Commissioner  for  the  Union 
Government  of  South  Africa,  72  Victoria  Street,  London,  S.  W. 

"The  duty  on  the  articles  enumerated  above  is  3d.  per  pound, 
or  25  per  cent,  ad  valorem,  whichever  shall  be  greater. 

"The  following  assessment  is  now  in  force  for  catalogues  of 
non-South  African  firms: 

Up  to  8  ounces    free 

Over  8  ounces  and  up  to  16  ounces   2d. 

Over  16  ounces  and  up  to  24  ounces  3d. 

Over  24  ounces  and  up  to  32  ounces  4d. 

and  thereafter  at  the  rate  of  Id.  for  each  additional  8  ounces  or 
fraction  thereof. 

' '  The  stamps  must  be  affixed  to  the  reverse  side  of  the  packets. 
They  are  prohibited  on  the  address  side, 

"Under  the  imperial  post  office  regulations  packages  or  par- 
cels of  over  five  pounds  in  weight  must  be  sent  by  parcel  post,  in 


240  PRACTICAL  EXPORTING 

regard  to  which  there  are  special  regulations  dealing  with  the 
question  of  customs  declaration." 

It  would  appear  from  the  foregoing  that  any  packet  of  printed 
matter  under  eight  ounces  is  admitted  duty  free  and  it  may  be 
possible  that  if  heavier  catalogues  were  addressed  to  South 
African  business  houses,  merchants  or  agents,  one  or  two  at  a 
time,  even  such  catalogues  might  escape  the  payment  of  duty. 

In  Canada  there  is  a  duty  of  15  cents  per  pound  on  adver- 
tising matter  sent  through  the  mails  even  though  each  piece 
is  separately  addressed,  but  this  does  not  apply  to  bona  fide 
wholesale  trade  catalogues  or  price  lists.  If  the  latter  are  sent 
not  more  than  three  to  any  one  address  of  actual  dealers  or 
wholesale  buyers  then  they  are  free  of  duty. 

The  Commonwealth  of  Australia  imposes  a  duty  of  lOd.  per 
pound  on  advertising  matter  including  catalogues  which  are 
sent  through  the  mails  or  otherwise.  This  duty  is,  however, 
imposed  only  when  it  amounts  to  1  shilling  on  catalogues  received 
in  any  one  mail  for  one  Australian  state.  The  states  of  the  Aus- 
tralian Commonwealth  are  New  South  Wales,  Victoria,  Queens- 
land, South  Australia,  West  Australia  and  Tasmania.  Austral- 
ian customs  stamps  for  the  prepayment  of  duties,  to  be  affixed 
on  the  reverse  side  of  each  piece  mailed,  may  be  purchased  from 
the  Official  Representative  of  the  Department  of  Trade  and  Cus- 
toms, Commonwealth  of  Australia,  New  York  City,  at  the  fol- 
lowing rates: 

Up  to        %  oz.  in  weight 1  cent 

Up  to      1%  oz.  in  weight 2  cents 

Up  to      2V^  oz.  in  weight 3   cents 

Up  to      314  oz.  in  ■v^eight 4   cents 

Up  to      4  oz.  in  weight 5   cents 

Up  to     4%  oz.  in  weight 6  cents 

Up  to     5V&  oz.  in  weight 7   cents 

Up  to     6  V2  oz.  in  weight 8  cents 

Up  to      7%  oz.  in  weight 9   cents 

Up  to     8  oz.  in  weight 10  cents 

Up  to     8%  oz.  in  weiglit 11  cents 

Up  to     9"^  oz.  in  weight 12  cents 

Up  to  10%  oz.  in  weight 13  cents 

Up  to  1 1 14  oz.  in  weight 14   cents 

Up  to  12  oz.  in  weight 15   cents 

Up  to  12%  oz.  in  weight 16   cents 

Up  to  13^  oz.  in  weight 17  cents 

Up  to  141,^  oz.  in  wciglit 18   cents 

Up  to  15%.  oz.  in  weight 19   cents 

Up  to  16  oz.  in  weight 20  cents 

Of  course,  if  such  duty  paid  stamps  are  purchased  and  affixed 
then  no  further  action  is  required  on  the  part  of  the  American 
house  dispatching  the  catalogues. 


ADVERTISING  TO  GET  EXPORT  TRADE         241 

It  will  be  observed  that  unless  catalogues  sent  by  one  mail  to 
one  state  weigh  one  pound  or  a  little  more  no  duty  is  imposed. 
If  it  is  desired  to  send  large  quantities  of  catalogues  it  is  possi- 
ble instead  of  purchasing  duty  paid  stamps  and  affixing  them 
to  each  piece  of  mail  matter,  to  stamp  each  piece  "Duty  For- 
warded under  Separate  Cover,"  and  after  weighing  the  total 
quantitiy  remit  the  required  amounts  of  duty  by  international 
post  office  money  order  to  the  deputy  postmaster  general  at 
the  capital  of  the  state  to  which  the  catalogues  are  addressed. 
That  official  when  put  in  possession  of  the  amount  of  the  re- 
quired duty  will  permit  its  free  importation  and  distribu- 
tion. Again,  arrangements  may  be  made  with  forwarding 
agents  to  ship  by  freight  cases  of  catalogues  properly  wrapped 
and  addressed  and  to  pay  import  duties  at  destination  and 
affix  local  postage  stamps. 

So  far  as  New  Zealand  is  concerned,  the  rate  of  customs 
duty  is  3  pence  per  pound  with  a  surtax  of  %  pence  per  pound 
if  not  produced  in  British  dominions.  However,  the  under- 
standing is  (see  official  United  States  regulations  regarding 
foreign  postal  rates  and  conditions)  that  duty  is  not  payable 
on  trade  catalogues  "of  the  goods  of  firms  or  persons  having 
no  established  business  in  New  Zealand."  There  is  no  repre- 
sentative  of  the  New  Zealand   government   in   United    States. 

In  Russia  there  is  also  a  duty  on  catalogues  or  other  trade 
literature  printed  in  the  Russian  language  but  single  copies  sent 
by  mail  are  exempt  from  duty.  It  should  be  noted  that  all 
printed  matter  imported  into  Russia  has  heretofore  been,  even  in 
normal  times,  subject  to  government  censorship. 

Brazil  does  not  allow  more  than  four  ounces  of  lithographed 
or  similar  colored  advertising  matter  to  be  imported  by  mail. 
This  does  not  usually  affect  catalogues  sent  out  by  American 
manufacturers  but  applies  to  the  distribution  by  mail  of  posters 
and  similar  advertising  matter.  Advertising  posters  for  Brazil 
should  be  iiighly  artistic,  richly  lithographed  or  embossed,  and 
printed  in  the  Portuguese  language,  since  municipal  laws  (at  least 
in  some  cities)  prohibit  the  display  of  posters  in  other  languages. 


CHAPTER  VIII 

EXPORT  COMMISSION  HOUSES 

Importance  and  Usefulness  of  Export  Houses — Commission 
Houses,  Merchants  and  Americun  Buying  Offices  of  Foreign 
Concerns — Their  Operations  as  Buyers  and  Shippers  of  Goods 
— Commission  Houses  Considered  as  Agents  and  Introducers 
of  New  Lilies — Policy  of  Giving  Such  Houses  Preferential 
Treatment  and  Granting  Special  Prices.  ^ 

NOT  long  ago  a  manufacturer  on  receiving  an  inquiry 
for  his  goods  from  a  concern  in  Peru  wrote  in  reply, 
"We  have  taken  this  up  with  our  New  York  exporter." 
What  did  this  manufacturer  expect  woukl  result  ?  What  reason 
had  he  for  thinking  that  the  "New  York  exporter"  in  question 
would  be  able  to  get  an  order  from  the  prospect  in  Peru?  It 
happened  that  that  New  York  house  is  not  known  as  having  any 
business  relations  in  Peru.  It  is  supposed  to  confine  its  opera- 
tions largely  if  not  wholly  to  Australasia. 

Perfectly  natural  is  the  question  in  the  mind  of  the  manu- 
facturer first  beginning  to  think  about  extending  his  export 
trade,  "Why  not  turn  all  my  export  business  over  to  a  profes- 
sional export  house  and  be  done  with  it?"  It  would  indeed  be 
quite  too  good  to  be  true  were  it  possible  thus  to  avoid  all  fur- 
ther attention  and  simply  draw  big  dividends  from  the  efforts  of 
the  professional  exporter.  But  there  is  no  royal  road  to  suc- 
cess in  the  export  trade  any  more  than  in  domestic  trade,  cer- 
tainly not  the  proposed  road. 

The  effort  in  this  chapter  has  been  to  treat  with  perfect  im- 
partiality the  vexed  question  of  relations  between  manufacturer 
and  export  commission  house.  Both  sides  are  presented.  If 
condemnation  of  some  practices  of  some  of  those  houses  seems 
severe,  it  is  to  be  remembered  that  the  Exporters'  and  Im- 
porters' Association  of  New  York  was  formed  by  these  very 
houses  largely  to  correct  abuses  in  the  trade,  and  the  reader 

242 


EXPORT  COMMISSION  HOUSES  243 

must  not  overlook  the  equally  emphatic  approval  here  given 
other  phases  of  their  work.  Numbers  of  them  are  large,  rich, 
important — some  of  them  indispensable  in  the  nation's  foreign 
trade.  Their  assistance  and  patronage  are  valuable  elements  in 
the  success  of  most  manufacturers  in  export  tracking.  The 
author  himself  was  for  years  engaged  in  the  export  commission 
business.  He  has  steadily  fought  the  prejudice  against  these 
houses  which  undoubtedly  exists  among  some  manufacturers, 
has  urged  a  fairer  attitude  towards  them.  But  to  cooperate 
with  them,  even  to  deal  with  them — intelligently — involves  a 
thorough  knowledge  of  their  position  and  operations.  Given 
that  knowledge,  the  manufacturer  should  be  able  to  establish  his 
business  with  them  on  a  profitable  and  advantageous  basis. 

The  value  of  export  houses  to  a  manufacturer  must  be  neither 
exaggerated  nor  underrated — it  must  be  fairly  appraised  from 
an  intelligent  appreciation  of  the  circumstances  in  each  indi- 
vidual case.  We  must  ask  ourselves  what  are  these  houses, 
how  do  they  operate,  what  facilities  do  they  offer  us  as  a  whole, 
what  do  individual  houses  offer? 

NUMBER  AND  IMPORTANCE  OF  EXPORT  HOUSES 

According  to  the  latest  edition  of  the  "Export  Trade  Direc- 
tory" there  are  in  New  York  City  alone  1,729  so-called  export 
commission  houses.  More  than  350  others  are  listed  in  New 
Orleans,  San  Francisco  and  many  other  American  ports.  Elimi- 
nating a  few  specialists,  exporters  devoted  solel}^  to  great  staples 
like  grain  and  cotton,  there  yet  remains  a  large  body  of  busi- 
ness concerns  devoting  themselves  exclusively  to  the  general 
export  trade  in  all  sorts  of  goods,  depending  on  it  alone  for 
bread  and  butter.  Similar  houses  exist  in  large  numbers  in 
other  countries.  In  London  there  are  1,596  houses  similarly 
classified,  in  Hamburg,  before  the  war,  1,189  were  so  listed. 

Important  Trade  of  Export  Houses. — These  American  houses 
undoubtedly  originated  a  large  part  of  the  enormous  export 
trade  which  the  United  States  enjoys  to-day.  Undoubtedly,  too, 
they  continue  to  handle  the  greater  part  of  our  existing  trade. 
It  was  estimated  before  the  development  of  munition  and  war 
supply  exports  that  from  six  to  twelve  of  these  houses  handled 
one  quarter  of  the  sum  total  of  American  exports.     It  has  been 


244  PRACTICAL  EXPORTING 

said  that  one  or  tM'O  houses  control  one-half  of  our  whole  trade 
with  China.  The  head  of  one  of  the  largest  New  York  export 
houses  has  asserted  that  forty  years  ago  these  houses  did  90  per 
cent,  of  the  American  export  trade,  that  to-day  they  handle 
only  70  per  cent.,  perhaps  not  over  60  per  cent.  Prominent 
men  in  the  South  American  trade  estimate  that  from  70  to  80 
per  cent,  of  that  trade  is  still  handled  by  export  commission 
houses.  A  similar  if  not  larger  percentage  of  our  exports  to 
Australasia  and  South  Africa  is  handled  by  such  houses.  It  is 
probably  true  that  up  to  the  i^resent  it  has  chiefly  been  these 
houses  that  have  extended  credit  for  American  goods  to  impor- 
ters in  Latin  America  and  the  Far  East. 

Prejudice  Against  Export  Houses. — An  unwarranted  preju- 
dice against  these  export  houses  exists  in  the  minds  of  many 
American  manufacturers.  They  seem  to  be  considered  by  those 
who  have  not  thoroughly  comprehended  their  operations  as 
parasites  on  our  export  trade,  or,  as  expressed  by  an  officer  of 
one  of  the  largest  exporting  concerns,  a  political  as  well  as  com- 
mercial power  on  the  West  Coast  of  South  America,  "The 
American  manufacturer  has  somehow  formed  a  notion  that  the 
exporter  is  something  like  a  leech  upon  the  factory.  In  his  igno- 
rance of  the  facts  the  manufacturer  even  persuades  himself  that 
the  exporter  is  exacting  a  tribute  akin  to  blackmail  and  conse- ' 
quently  is  inimical  and  should  be  eliminated." 

On  the  other  hand,  there  are  many  manufacturers  disposed 
to  exaggerate  the  importance  of  these  houses  or  their  necessity 
in  the  adequate  extension  of  our  trade  in  other  lands.  Un- 
doubtedly the  truth,  as  usual,  lies  somewhere  between  these  two 
extremes. 

Exporters  as  Middlemen. — Certainly  the  export  houses  are 
not  the  "whole  thing."  Probably  the  notable  world-wide 
tendency  toward  the  elimiuation  of  the  middleman  is  often 
carried  to  too  great  lengths.  The  president  of  one  of  the  large 
New  York  exporting  houses,  in  a  paper  read  before  a  conven- 
tion of  the  American  Hardware  Manufacturers'  Association,  de- 
clared: "The  wholesale  merchants  have  changed  with  the  times 
and  the  exporters  have  done  so,  or  certainly  should  have  done 
so,  as  well.  I  do  not  see  why  you  manufacturers  should  not  be 
able  to  sell  your  own  goods  in  this  country  over  the  head  of 


EXPORT  COMMISSION  HOUSES  245 

the  jobber  and  become  jobbers  yourselves,  and  I  do  not  see  why 
you  should  not  be  able  to  do  your  own  exporting  over  the  head 
of  the  exporter  and  become  exporters;  but  I  know  one  thing, 
that  the  work  of  marketing  the  goods  must  be  learned,  must  be 
carefully  studied  and  cannot  be  accomplished  without  an  in- 
vestment of  brain,  capital  and  expense,  just  the  same  as  one  or 
the  other  principle  of  the  manufacturing  process  is  nothing  but 
a  link  in  the  chain  of  work  from  producer  to  consumer.  The 
question  for  your  consideration  is  whether  you  can  run  that  sell- 
ing or  exporting  department  at  a  less  expenditure  and  with 
greater  efficiency  than  it  would  cost  you  under  the  division  of 
labor  by  handing  over  that  work  to  another  department,  which, 
if  you  please,  we  may  call  the  jobber  exporter."  It  should  be 
noted  in  passing  that  the  speaker  was  here  arguing  for  his  own 
side  of  the  question.  We  shall  shortly  have  occasion  to  consider 
the  possibilities  of  export  houses  as  "export  department." 

Export  Commission  Houses  not  Brokers. — ^leanwhile,  the 
reader  nuist  be  warned  against  a  very  frequent  confusion  of 
ideas  in  the  minds  of  American  manufacturers,  at  least  a  eon- 
fusion  of  terms  in  their  references  to  houses  now  under  dis- 
cussion. These  export  commission  houses  are  not  "brokers." 
They  must  not  be  confused  with  the  manufacturers'  combination 
export  agents  or  "export  managers,"  another  large  body  of  men 
who  are  notable  in  export  circles  in  New  York  and  some  other 
cities,  whose  province  we  have  already  examined.  The  manu- 
facturers' export  agent  takes  the  place  of  a  New  York  salesman 
for  the  factories  which  he  represents  in  so  far  as  the  export 
trade  is  concerned.  He  cultivates  the  trade  of  the  export  com- 
mission houses.  The  export  commission  houses  cultivate  travle 
only  in  foreign  countries.  One  of  them  in  New  York  cannot 
and  does  not  attempt  to  sell  another  New  York  house  in  the 
same  category,  no  matter  what  agencies  for  American  factories 
it  may  control.  Wanamaker  cannot  cherish  high  hopes  of  suc- 
cess in  trying  to  sell  Marshall  Field.  They  are  not  properly 
"brokers,"  although  William  Harris  Douglas,  of  the  important 
exporting  house  of  Arkell  &  Douglas,  has  used  that  term  sar- 
castically in  saying,  "The  American  exporter,  that  is  the  Amer- 
ican export  commission  house  is  no  longer  a  merchant,  no  longer 
a  commission  house,  he  is  simply  a  broker,  an  intermediary  be- 


246  PBACTICAL  EXPORTING 

tween  you  (the  American  manufacturer)  and  the  buyer  abroad." 
The  term  export  merchant  or  export  commission  merchant  is 
commonly  used  in  reference  to  these  houses.  As  a  matter  of 
fact  there  are  few  of  them  which  are  properly  to  be  called 
"merchants."  First  of  all,  we  have  to  decide,  therefore,  just 
what  are  these  1,700  export  houses  in  New  York. 

EXPORT  MERCHANTS 

A  "merchant,"  in  the  old  and  preferable  definition  of  the 
word,  is  a  business  house  engaged  in  buying  and  selling  goods 
for  its  own  account  in  the  oversea  trade.  Such  were  our  early 
American  export  merchants.  They  used  to  buy  quantities  of 
goods,  load  them  on  board  a  ship  and  send  them  to  some  foreign 
market  to  be  sold  there  to  the  best  advantage  possible,  re-load- 
ing the  vessel  with  foreign  goods  and  bringing  them  home  for 
sale  here.  The  advent  of  the  steamer,  of  quick  mails  and  of 
instantaneous  cable  communication,  long  ago  changed  all  such 
operations  even  in  the  wildest  and  most  undeveloped  quarters 
of  the  globe.  Export  merchants  still  exist  but  their  operations 
are  of  quite  a  different  character. 

Export  Merchants  in  Europe. — In  England,  for  example, 
there  are  great  houses  properly  to  be  called  export  merchants 
who  simplj^  loan  their  capital  to  importers  in  colonial  or  foreign 
markets.  Such  a  British  house,  for  example,  decides  to  place 
£50,000  in  South  Africa.  Certain  importers  who  are  thor- 
oughly well  known  to  the  principals  are  given  varjdng  credits — 
£5,000  to  one,  £10,000  to  another,  etc.  These  importers  order 
from  England  such  goods  as  they  please,  their  bills  are  paid  by 
the  British  export  merchant  but  the  latter  does  not  interest  him- 
self in  the  character  or  the  source  of  the  goods  ordered.  He 
simply  restricts  the  amount  of  money  which  he  is  willi^ig  to  ad- 
vance to  each  customer  who  is  obligated  for  such  amount  by  in- 
terest bearing  notes  or  other  securities.  Large  Hamburg  export 
merchants  have  done  business  in  a  little  different  fashion.  Al- 
though they  loaned  money  liberally  in  certain  foreign  markets,  it 
was  usually  done  in  connection  with  export  and  import  opera- 
tions and  in  exporting  to  their  foreign  customers  they  have 
virtually  shipped  their  own  goods,  "neutral"  goods  bearing  no 
marks  of  origin,  that  is,  their  customers  have  not  been  permitted 


EXPORT  COMMISSION  HOUSES  247 

to  know  the  actual  manufacturers  or  other  sources  of  the  goods 
shipped  to  them. 

Export  Merchants  in  the  United  States. — It  is  doubtful  if 
there  are  more  than  a  dozen  American  export  merchants,  prop- 
erh'  so-called,  in  all  the  United  States.  There  are  buying  offices 
here  for  foreign  merchants  but  these  we  must,  for  the  moment, 
disregard.  Leaving  out  of  consideration  two  prominent  houses 
in  the  trade  of  the  West  Coast  of  South  America,  one  hardware 
exporter  who  has  been  exceedingly  important  in  European  fields, 
one  old  and  rich  house  which  as  banker  works  on  lines  similar 
to  English  and  German  houses,  and  a  few  minor  concerns,  who 
may  properly  be  called  export  merchants,  most  of  our  Ameri- 
can exporters,  if  they  operate  to  any  extent  as  merchants,  do 
so  only  in  certain  lines  of  goods  which  it  has  been  found  can 
only  be  profitably  developed  in  a  special  and  usually  a  limited 
market  through  carrj^ing  stocks  of  those  goods.  A  great  dif- 
ference of  opinion  is  manifested  among  New  York  exporters 
themselves  as  to  whether  export  houses  are  properly  to  be  called 
merch^ts.  As  to  how  some  of  these  New  York  export  houses 
themselves  describe  their  operations  we  have  recently  had  several 
declarations  in  public  and  in  print  which  are  worthy  of  note. 

Claim  to  Stock  Goods.— We  find,  for  example,  William  E. 
Peck,  of  the  New  York  export  firm  headed  by  him,  reported  in 
the  printed  proceedings  of  the  second  National  Foreign  Trade 
Convention  as  having  in  the  course  of  a  speech  said:  "There 
seems  to  be  a  very  great  deal  of  misunderstanding  about  the 
functions  or  operations  of  a  New  York  export  house  or  shipping 
concern.  There  seems  to  be  an  idea  that  these  houses  only  do  a 
commission  business.  As  a  matter  of  fact  nearly  all  of  the 
large  houses  stock  goods  in  the  different  cities  where  they  have 
branches  and  sell  from  these  stocks.  In  London,  for  instance, 
we  have  stocked  goods  since  1888.  We  do  business  there  in  the 
English  way.  AVe  conform  in  every  way  to  the  English  method 
of  doing  business." 

Differing-  Points  of  View.— On  the  other  hand,  in  an  address 
before  the  Foreign  Commerce  class  conducted  by  the  West  Side 
Y.  M.  C.  A.,  of  New  York,  Welding  Ring,  of  the  export  and  im- 
port house  of  Mailler  &  Quereau,  interested  largely  in  the  Aus- 
tralian trade,  and  President  of  the  American  Exporters'  and 


248  PRACTICAL  EXPORTING 

Importers'  Association,  a  body  composed  exclusively  of  what 
are  commonly  known  as  export  commission  houses,  declares  in 
the  printed  report  of  his  lecture,  "One  of  the  conditions  in- 
sisted upon  by  our  buyers  in  Australia  and  New  Zealand  is  that 
a  commission  house  shall  not  be  interested  in  importing  and  sell- 
ing goods  on  its  own  account.  They  very  rightly  claim  that 
both  branches  of  the  business  cannot  be  conducted  in  harmony. 
It  would  not  be  fair  for  a  large  buyer  or  even  a  small  one  in 
Australia  to  get  an  order  for  anj^  line  of  goods,  and  particularly 
for  specialties  and  then  have  the  commission  house  order  out  a 
similar  shipment  and  immediately  be  in  competition  with  the 
parties  from  whom  they  received  the  order.  The  Australians 
are  very  sensitive  on  this  point  and  they  will  not  tolerate  action 
of  such  nature. ' ' 

It  will  hardly  be  denied  by  the  export  houses  themselves  that 
only  a  very  limited  number  of  the  1,700  houses  listed  in  New 
York  as  exporters  carry  any  stocks  of  goods  in  any  market 
where  they  do  business.  If  one  of  them  carries  stocks  of  Ameri- 
can toys  in  London,  or  stocks  of  photographic  and  similar  novel- 
ties at  some  center  on  the  Continent  of  Europe,  this  is  a  special 
development  of  his  trade  and  hardly  suffices  to  justify  the  good 
old  term  "merchant."  The  exporter  who  carries  toys  in  Lon- 
don does  not  also  carry  stocks  of  other  goods,  certainly  not  of 
the  great  commodities  of  commerce  which  should  properly  justify 
the  assumption  of  the  merchant  title.  Such  a  house  is  more 
fairly  to  be  called  a  toy  jobber — a  sharp  distinction  in  terms. 

AMERICAN  OFFICES  OF  FOREIGN  HOUSES 

Each  passing  year  sees  established  at  New  York,  or  at  some 
other  convenient  American  port,  more  and  more  buying  offices 
of  foreign  business  houses.  All  of  them  are  buyers  of  goods  for 
export,  but  many  of  them  are  buying  offices  for  certain  in- 
dustrial enterprises  such  as  railways,  mines,  sugar  mills,  etc.,  lo- 
cated in  foreign  countries.  Perhaps  one-quarter  of  the  whole 
number  represent  actual  buyers  of  general  lines  of  merchandise, 
that  is,  represent  large  wholesale  or  even  large  retail  foreign 
business  houses,  or  in  some  cases  foreign  merchants,  properly  so 
described. 

Buyers  Here  for  Local  Enterprises. — The  buying  offices  es- 


EXPORT  COMMISSION  HOUSES  249 

tablished  in  the  United  States  by  foreign  houses  have  in  almost 
all  cases  merely  followed  the  development  of  the  business  of  such 
houses  from  beginnings  of  experience  with  American  goods  made 
in  other  fashion.  It  has  been  found  desirable  by  these  large 
customers  for  our  wares  to  establish  their  own  buying  office  here 
instead  of  attempting  direct  relations  with  manufacturers  or 
suppliers  at  long  range,  or  instead  of  employing  export  com- 
mission houses  as  buyers. 

When  the  purchases  of  American  goods  by  a  foreign  house 
mount  up  to  $100,000  or  $200,000  a  year,  it  is  clear  that  if  it 
costs  the  buyers  say  2Vi>  per  cent,  commission  to  have  their  re- 
quirements attended  to  in  this  country  by  outside  parties  then  it 
becomes  a  question  whether  their  business  cannot  be  more  satis- 
factorily and  perhaps  more  economically  carried  on  by  sending 
to  this  country  as  buyer  one  of  their  own  employees,  whose  sole 
interest  will  be  the  advantage  of  his  principals.  JMoreover,  a 
few  of  the  houses  thus  represented  in  the  American  market 
are  both  importers  and  exporters.  They  not  only  buy  Ameri- 
can goods  here  but  they  ship  to  the  United  States  foreign  com- 
modities which  their  American  offices  dispose  of  to  such  profit 
as  may  be  possible.     These  are  instances  of  proper  merchants. 

Buying  Offices  of  Import  and  Export  Merchants.— We  find 
in  New  York  such  examples  of  British,  French,  Australian,  Japa- 
nese and  other  nationalities.  Japanese  houses  buy  in  the  United 
States  railway  and  engineering  supplies  and  many  other  lines  as 
well,  but  import  into  the  American  market  Japanese  silks, 
mattings  and  other  native  products.  Houses  of  British  nation- 
ality whose  main  business  lies  in  quite  other  parts  of  the  world 
maintain  offices  in  New  York  for  the  purchase  of  American  sup- 
plies, say,  for  their  branches  in  the  Orient,  and  for  the  sale  here 
of  similar  Oriental  products  to  those  which  the  native  Japanese 
houses  sell. 

An  example  may  be  found  in  the  New  York  establishment  of 
a  large  house  of  British  nationality  whose  business,  however, 
lies  in  the  Far  East  where  a  chain  of  houses  is  established  in  the 
principal  ports  of  China  and  Japan.  The  New  York  branch  of 
this  English  house  has  been  a  large  importer  of  mattings  and 
other  Oriental  products,  and  at  the  same  time  has  been  a  large 
exporter  of  American  cotton  piece  goods  and  of  machinery  of 


250  .  PRACTICAL  EXPORTING 

various  descriptions.  It  should  be  noted  that  houses  of  this 
sort  also  maintain  their  buying  offices  in  London  and  in  other 
important  European  commercial  cities. 

Buying  Houses  of  Local  Specialists. — In  addition  to  mer- 
chants, in  the  old  fashioned  acceptation  of  that  term,  like  those 
just  referred  to,  we  have  also  in  New  York  the  buying  offices  for 
large  foreign  concerns  doing  a  local  wholesale,  or  wholesale  and 
retail  business  abroad  in  certain  definite  lines.  Some  foreign 
department  stores,  for  example,  maintain  buyers  here ;  some 
local  importers  of  other  specialized  lines — agricultural  imple- 
ments, furniture  or  hardware,  for  example.  As  a  rule,  such 
houses  are  strictly  local.  There  are,  however,  examples  of  spe- 
cialized business  houses  which  have  establishments  in  several  coun- 
tries, one  for  example  doing  business  in  machinery  and  agricul- 
tural implements  in  both  Brazil  and  the  Argentine  Republic. 

Buyers  Here  Only  Links  in  a  Chain. — The  nationality  of 
these  buyers  of  American  goods  is  a  matter  of  no  importance 
at  all.  The  head  buyer  in  New  York  for  a  large  British  con- 
cern whose  business  lies  in  the  Argentine  Republic  was  for  a 
long  time  a  German.  A  big  German  house,  whose  business  estab- 
lishments were  all  in  the  Far  East,  employed  Englishmen  as 
cotton  experts  in  its  New  York  office  for  the  purchase  of  Ameri- 
can cotton  goods.  These  buyers,  whether  Germans  acting  for 
English  houses  in  South  America,  or  whether  Englishmen  act- 
ing for  German  houses,  were  not  sent  here  to  the  United  States 
to  do  as  little  as  possible  in  American  goods.  They  were  sent 
here  to  buy  all  the  goods  of  our  manufacture  which  their  houses 
in  any  part  of  the  world  miglit  regard  as  profitable  lines  tc 
handle.  The  same  houses,  as  has  been  suggested,  have  also  buj^- 
ing  offices  in  England,  very  likely  in  France  and,  before  the 
war,  Germany  also.  The  buyers  in  New  York  have  monej''  and 
fame  for  themselves  to  make ;  their  effort  is  to  increase  the  busi- 
ness of  their  principals  in  American  goods,  that  is,  increase  their 
own  business,  as  fast  as  possible  but  always  on  an  advantageous 
basis. 

If  it  is  a  question  of  buying  pumps  for  Argentina,  the  man- 
ager in  New  York  for  a  Buenos  Aires  establishment  will  secure 
the  best  quotations  possible  in  this  country.  At  the  same  time, 
offices  of  the  same  house  in  London  and  in  Continental  Europe 


EXPORT  COMMISSION  HOUSES  251 

will  be  securing  quotations  for  similar  kinds  and  grades  of 
pumps.  All  offices  know  what  the  others  are  doing  and  the 
order  ultimately  goes  to  the  manufacturer  of  no  matter  what 
nationality  who  makes  the  lowest  offer  or  presents  convincingly 
the  greatest  advantages  for  the  goods  to  be  supplied. 

THE  EXPORT  COMMISSION  HOUSE 

The  great  bulk  of  the  1,729  export  houses  listed  in  the  City 
of  New  York  and  of  over  350  more  listed  in  the  Export  Trade 
Directory  as  established  at  other  American  ports,  are  properly 
to  be  distinguished  as  export  commission  houses.  It  is  well  nigh 
impossible  to  give  an  accurate  and  comprehensive  definition  of 
this  term  "export  commission  house." 

Export  Commission  Business  Defined. — The  fact  that  such  a 
house  buys  and  pays  for  the  goods  which  it  orders  from  the 
manufacturer  is  misleading  in  the  minds  of  many  manufacturers. 
In  its  primitive  sense  the  term  export  commission  house  applies 
to  the  American  firm  which  simply  executes  orders  received  by 
it  from  foreign  customers,  charging  the  latter  a  certain  rate  of 
commission  in  return  for  acting  for  it  as  its  representative  in  the 
United  States.  Nowadays,  however,  the  operations  of  the  ex- 
port commission  houses  are  varied  and  very  much  mixed.  Most 
of  them  do  the  bulk  of  their  business  on  a  commission  basis. 
Some  of  them  do  a  little  as  merchants,  most  of  them  do  as  much 
as  they  can  as  agents  for  specific  American  lines.^ 

The  enormous  foreign  business  carried  on  by  many  of  these 
houses  is  not  always  appreciated.  The  manufacturer  who  does 
an  export  business  of  $100,000  a  year  may  be  very  well  pleased 
with  himself.     The  manufacturer  who  has  a  total  annual  turn- 

1  The  head  of  a  large  New  York  export  house  has  stated:  "There  is  a 
difTerenee  between  exporter  and  exporter.  We  have  those  who  work  on 
antiquated  lines,  sit  behind  their  office  desks  with  nothing  more  than  an 
office  expenditure,  wait  for  indents  from  their  clients  to  buy  wliat  they 
ask  for,  charge  a  small  commission  for  financing,  and  then  are  done  with 
the  business.  There  are  exporters  who  are  alive  and  progressive,  who  have 
their  traveling  men  all  over  creation  carrying  extensive  sets  of  samples. 
There  are  exporters  who  even  carry  stocks  in  different  parts  of  the  world 
and  so  to  speak  take  the  position  of  the  manufacturer's  foreign  agent  " 
This  gentleman's  own  business,  be  it  noted,  is  chiefly  as  a  merchant;  few 
of  his  confreres  operate  in  the  same  fashion.  "Indent"  is  the  term  often 
used  in  referring  to  commission  house  orders. 


252  PRACTICAL  EXPORTING 

over,  domestic  and  foreign  combined,  of  a  million  dollars  a  year 
is  called  a  big  house.  There  are  scores  of  export  houses  which 
do  a  business  of  $100,000  a  week,  dozens  having  a  monthly  busi- 
ness of  several  million  dollars  exclusively  in  the  export  trade. 
However,  it  is  a  common  mistake  among  manufacturers  to  re- 
gard any  "exporter's"  letter-head  as  the  indication  of  a  large 
concern.  There  are  many  of  these  exporters  who  are  small  and 
insignificant  factors  in  the  trade,  many  even  of  doubtful  reputa- 
tion and  credit  standing. 

Advantages  to  Foreign  Buyers. — A  great  many  foreign 
buyers  believe  they  find  certain  facilities  in  passing  their  orders 
(or  indents,  we  may  use  the  term  without  distinction)  for  Amer- 
ican goods  through  export  commission  houses,  facilities  which 
are  worth  to  them  the  small  commission  charged  by  these 
houses.  For  example,  take  an  Australian  importer  of  Ameri- 
man  hardware.  Every  few  months  he  may  have  orders  to  place 
with,  say,  fifty  different  American  manufacturers  of  sundry 
kinds  of  hardware.  Instead  of  undertaking  correspondence 
with  fifty  isolated  manufacturers,  the  Australian  house  sends  all 
fifty  orders  under  one  cover  to  that  New  York  export  com- 
mission house  with  which  mutually  satisfactory  arrangements 
have  been  made.  The  orders  are  distributed  by  the  commission 
house  to  the  manufacturers,  the  goods  collected  together  and 
shipped  on  one  bill  of  lading;  the  commission  house  pays  the 
fifty  individual  suppliers  and  finances  the  operation  in  one  draft 
on  the  Australian  house.  The  latter  is  relieved  of  the  work  and 
annoyance  which  would  have  been  entailed  by  attempting  direct 
relations  with  each  of  these  fifty  manufacturers  and  the  conse- 
quent receipt  of  fifty  different  bills  of  lading,  drafts,  insurance 
documents,  etc. 

The  foreign  buyer  operating  through  an  American  export 
commission  house  relies  on  it  frequently  for  obtaining  new 
goods  to  the  best  advantage.  It  may  even  place  the  orders  in 
blank  to  be  executed  by  the  American  house  according  to  its 
best  judgment.  Certain  credit  is  usually  extended  by  the  com- 
mission house  connections  of  foreign  buyers.  This,  however, 
usually  takes  the  form  of  acceptances  of  sixty-  or  ninety-day 
drafts  which  will  be  better  understood  when  such  financing  is 
examined  in  a  later  chapter.     However,  in  attempting  to  do 


EXPORT  COMMISSION  HOUSES  253 

"business  directly  witli  manufacturers,  foreign  buyers  frequently 
encounter  objections  on  tbeir  part  to  similar  terms,  because  many 
manufacturers  are  not  familiar  with  international  banking  oper- 
ations. 

Real  economies  in  freight  charges  are  effected  when  an  export 
house  collects  and  ships  on  one  bill  of  lading  many  small  lots  of 
goods  from  isolated  manufacturers — often  saving  on  the  freight 
as  much  as  or  more  than  its  charge  for  commission  amounts  to. 

Other  advantages  which  foreign  importers  believe  they  find 
through  entrusting  purchases  to  export  commission  houses  in- 
clude the  responsibility  which  is  assumed  by  the  latter  as  a 
middleman,  as  to  the  character  of  the  goods  shipped,  adequate 
packing  and  protection,  etc.  In  most  cases  this  responsibility 
resolves  itself  down  to  acting  as  intermediary  here  between 
buyer  and  manufacturer  when  complaint  is  made  that  the  lat- 
ter has  not  properly  made  shipment.  The  exporters  seldom  ex- 
amine shipments,  rarely  if  ever  unpack  cases  or  check  contents, 
usually  never  see  the  cases  they  ship.  They  rely  absolutely  on 
the  manufacturers  from  whom  they  buy.  Again,  export  com- 
mission houses  offer  facilities  for  quoting  on  complete  plants 
when  individual  manufacturers  each  make  only  a  part,  perhaps 
one  out  of  many  required  parts. 

In  Varying  Favor  Abroad. — Commission  houses,  however, 
are  not  universally  used  or  approved  of.  The  ambition  to  do 
away  with  the  middleman  is  much  more  notable  in  certain  parts 
of  the  world  than  in  others.  In  normal  times  it  is  especially 
characteristic  of  all  of  Europe.  Buyers  there,  accustomed  for 
the  most  part  to  doing  business  direct  with  factories,  often  ob- 
ject strenuously  to  a  middleman  of  any  description  whatever, 
and  only  a  limited  number  of  American  export  commission 
houses  have  business  of  any  importance  in  Europe,  the  sole  ex- 
ceptions being  either  in  great  staple  lines,  like  cotton  or  grain, 
or  in  certain  specialities  for  which  the  greater  part  of  a  business 
has  been  worked  up  as  jobbers. 

It  is  also  characteristic  of  houses  in  other  parts  of  the  world 
who  are  just  beginning  to  import  their  own  goods  that  an  effort 
is  made  to  disregard  the  export  commission  house  and  establish 
direct  relations  with  manufacturers.  This  is  true  of  many  con- 
cerns  in   Latin   America.     Sometimes   they  are   of  too   small 


254  PRACTICAL  EXFOETING 

caliber  to  justify  direct  individual  relations  and  undoubtedly 
the  greater  part  of  this  trade  should  preferably  remain  in 
the  hands  of  competent  exporters.  Almost  all  of  the  Central 
American  trade  is  a  business  in  the  exchange  of  products. 
Buyers  in  those  republics  consign  shipments  of  coffee,  hides,  ma- 
hogany,"  cocoa,  chicle,  etc.,  to  their  agents  in  the  United  States, 
and  the  latter  buy  and  ship  to  their  Central  American  connec- 
tions such  American  supplies  as  they  require.  Comparatively 
little  of  this  trade  can  be  or  ought  to  be  done  direct  from  manu- 
facturer to  local  buyer. 

In  general,  it  may  be  said  that  the  fad  for  ''direct  relations" 
on  the  part  of  many  importers  in  foreign  countries  has  extended 
too  far,  is  cherished  by  concerns  of  entirely  too  limited  impor- 
tance, located  at  interior  points  of  difficult  access  and  com- 
munication. Such  buyers  are  likely  ultimately  to  wake  up  to 
the  extra  costs  involved  in  handling  small  shipments  indi- 
vidually. 

The  strongest  hold  of  the  export  commission  houses  is  un- 
doubtedly on  the  trade  of  Australasia,  South  Africa  and  the 
Orient.  It  is  characteristic  of  most  importers  in  these  parts 
of  the  world  that  by  preference  their  orders  are  placed  through 
commission  houses.  Proposals  by  manufacturers  for  direct  re- 
lations will  rather  more  frequently  than  not  be  declined  by  such 
importers.  It  may  not  be  too  much  to  say  that  90  per  cent,  of 
the  general  trade  of  the  United  States  with  South  Africa  and 
Australia  is  carried  on  through  the  commission  middleman. 

Advantages  to  American  Manufacturers. — From  the  point  of 
view  of  the  American  manufacturer,  dealing  with  a  New  York 
export  commission  house  is  apparently  like  relations  with  any 
other  New  York  customer.  In  the  case  of  an  export  order  all 
risk  and  responsibility  seems  to  be  avoided.  One  receives  an 
order  from  a  New  York  exporter,  fills  it,  collects  his  money  just 
as  he  would  from  Wanamaker's  or  Macy's  and  it's  all  over. 
Self-evidently  this  is  a  narrow,  short-sighted  policy  even  were 
it  an  exact  statement  of  fact,  which  is  not  the  case.  No  manu- 
facturer, disposed  to  push  for  all  the  business  he  can  possibly 
get,  can  afford  thus  to  abandon  his  goods.  He  must  follow 
them,  and  the  lead  they  give.     However,  a  great  deal  of  de- 


EXPORT  COMMISSION  HOUSES  2E35 

tailed  attention  is  undoubtedly  avoided  when  export  orders  are 
received  through  commission  houses. 

Whatever  else  export  houses  may  offer  to  manufacturers,  al- 
most all  of  them  have  customers  engaged  in  every  branch  of 
trade  and  industry  in  one  or  more  foreign  markets,  to  whom 
they  can  forward  a  manufacturer's  catalogue  and  price  list. 
They  may  also  write  special  letters  urging  orders — when  in- 
fluenced by  friendship  fur  the  manufacturer  or  duly  impressed 
by  the  novelty  of  his  product.  This  may  be  no  small  advantage, 
even  though  the  decision  as  to  ordering  must  come  frpm  the 
other  end,  from  the  exporter's  customer.  With  their  ordinary 
customers  the  export  houses  cannot  presume  too  far  or  take  too 
many  liberties.  When  visiting  the  United  States  customers  may 
be  introduced  to  favored  manufacturers,  a  distinct  advantage. 

As  Foreign  Trade  Advisers. — The  advice  of  export  houses  is 
often  of  assistance,  but  in  this  regard  note  what  William  C. 
Downs,  when  United  States  Commercial  Attache,  has  to  say  re- 
garding this  phase  of  doing  business  with  commission  houses. 
]\Ir.  Downs  was  for  many  years  connected  with  prominent  New 
York  export  houses.  "It  is  hardly  to  be  expected  that  the 
export  commission  merchant  will  be  very  cordial  and  eager  to 
impart  information  to  a  manufacturer  who  evidently  intends 
later  on  to  go  over  his  head  and  transact  a  direct  business.  It 
is,  therefore,  a  question  of  ethics  whether  a  manufacturer 
should  use  the  export  commission  merchant  to  help  him  to  a 
solution  of  his  first  problem,  if  he  does  not  intend  to  call  upon 
him  for  assistance  in  the  handling  of  his  second  and  third  prob- 
lems. This  he  must  decide  when  he  has  studied  them  also  and 
formulated  his  complete  plan  of  campaign." 

Frank  Relations  Urged. — Going  on  to  develop  his  argument 
from  the  export  commission  house  standpoint,  Mr.  Downs  con- 
tinued (St.  Louis  Convention)  :  "There  is  much  need  for 
closer  cooperation  between  the  manufacturers  and  the  commis- 
sion merchants,  who  always  have  been  and  still  are  the  pioneers 
and  who  will  still  handle  a  very  considerable  percentage  of  our 
export  trade.  They  must  be  the  main  reliance  especially  of 
the  smaller  manufacturer  in  introducing  his  goods  into  a  for- 
eign market.     They  will  gladly  distribute  his  catalogues  and 


256  PRACTICAL  EXPORTING 

samples,  not  indiscriminately,  but  among  possible  buyers,  will 
write  special  letters  in  the  language  of  the  country  for  which 
they  are  intended,  describing  and  recommending  his  goods,  will 
give  him  the  services  of  their  local  agents  and  of  their  travelers, 
but  they  expect  in  return  that  the  manufacturer  will  play  fair 
and  protect  them  in  the  business  that  may  result. 

"Let  the  manufacturer  who  does  not  wish  to  conduct  and 
finance  his  own  foreign  selling  campaign  inform  himself  thor- 
oughly as  to  which  are  the  best  equipped  and  best  represented 
commission  houses  operating  in  the  territory  which  he  wishes 
to  enter  and  lay  out  with  them  a  selling  campaign  that  shall  be 
mutually  satisfactory.  He  must  remember  that  the  fixed  ex- 
penses of  such  organizations  are  very  heavy  indeed,  and  that  they 
depend  on  the  commissions  paid  them  by  their  clients  on  a  large 
volume  of  business  to  cover  these  expenses,  compensate  the  risk 
they  run  and  earn  a  reasonable  profit  on  their  big  capital  in- 
vestment. The  manufacturer  who  wishes  to  sell  his  goods 
through  the  commission  houses  makes  a  serious  mistake  in  forc- 
ing them  to  compete  too  strenuously  against  each  other  in  the 
sale  of  small  lines,  as  finally  the  selling  commission  is  reduced 
to  a  point  where  it  is  of  interest  to  no  one  actively  to  push  the 
line.     Hence  the  need  of  intelligent  cooperation." 

Their  Case  Presented  by  Exporters. — Other  arguments  for 
the  advantages  of  working  with  or  through  export  commission 
houses  are  advanced  by  C.  A.  Richards,  formerly  manager  of 
the  Export  Department  of  Bowring  &  Co.,  of  New  York,  dur- 
ing the  war  Chairman  of  the  Contraband  Committee,  War  Trade 
Board,  and  afterward  with  the  American  International  Corpora- 
tion. In  a  lecture  before  a  class  in  exporting  conducted  b}^  the 
Extramural  Division  of  the  School  of  Commerce  of  New  York 
University  he  observed:  "The  commission  house  has  in  its  em- 
ploy experts  in  buying,  shipping,  insuring  and  financing,  and 
these  men  can  naturally  work  more  efficiently  and  more  cheaply 
than  the  manufacturer  could  by  employing  his  own  export  de- 
partment. In  addition  the  commission  houses  nearly  always 
give  credits  and  this  alone  makes  it  possible  for  manufacturers, 
who  could  not  otherwise  finance  their  export  shipments,  to  do  an 
export  trade.  .  .  .  After  a  manufacturer  has  lost  a  few  thousands 
dollars  in  a  vain  attempt  to  do  business  without  their  aid,  he  is 


EXPORT  COMMISSION  HOUSES  257 

very  likely  to  swing  around  the  other  way  and  feel  that  the 
export  commission  house  alone  is  necessary  for  his  success. 
This  is  also  incorrect. 

"For  a  manufacturer  to  build  up  and  maintain  a  satisfactory 
export  business  he  should  not  rel}'  entirely  on  an  export  com- 
mission house.  He  should  judiciously  advertise  in  reputable 
foreign  trade  magazines  and  he  should  send  his  own  salesmen 
abroad  whenever  possible.  .  .  .  Because  I  urge  a  manufacturer 
to  create  a  demand  for  his  goods  himself  I  am  not  arguing  that 
he  should  do  more  than  create  a  demand.  When  the  importer 
abroad  is  ready  to  buy  then  is  the  time  the  export  commission 
house  should  be  employed.  .  .  .  Most  of  the  larger  export  com- 
mission houses  maintain  branches  at  certain  large  foreign 
centers  and  through  these  branches  or  their  agents  they  can 
generally  tell  the  manufacturer  whether  his  line  is  one  that 
could  be  handled  profitably  in  that  particular  market  and  give 
him  considerable  preliminary  information  as  to  the  possibility 
of  making  a  campaign  there." 

The  foregoing  are  among  the  fairest  and  most  moderate  of 
the  claims  advanced  by  export  commission  houses.  The  manu- 
facturer should  strive  to  examine  them  justly  and  impartially, 
to  appraise  at  its  true  value  the  advantage  to  himself  of  com- 
mission house  cooperation.  It  is  evidently  important  that  we 
must  understand  the  whole  scheme  of  the  operations  of  houses 
of  the  description  we  now  have  in  mind. 

ORGANIZATION  OF  EXPORT  COMMISSION  HOUSES 

Possibly  the  first  necessity  of  a  concern  establishing  itself  as 
an  export  commission  house  is  to  secure  foreign  connections,  to 
persuade  foreign  buyers  to  entrust  to  it  the  execution  of  their 
orders  for  American  goods.  Perhaps  next  comes  the  necessity 
for  a  wide  and  general  knowledge  of  American  goods  which 
are  largely  sold  for  export,  sources  of  supply  and  ruling  prices. 
Coupled  with  this  must  of  course  be  a  thorough  acquaintance 
with  export  practices,  routine  work,  shipping,  etc.  Perhaps 
no  better  description  of  the  routine  in  the  office  of  an  export 
commission  house  can  be  quoted  than  that  of  i\Ir.  Richards,  in- 
cluded in  the  lecture  just  mentioned: 

Basis  of  Relations  with  Foreign  Clients. — "The  bulk  of  the 


258  PRACTICAL  EXPOBTING 

business  done  by  the  export  commission  house  is  handled  as 
follows:  Say,  for  example,  a  hardware  importer  in  Australia 
makes  up  a  -list  of  goods  which  he  requires  from  this  market, 
and  these  indents,  as  they  are  generally  called,  are  sent  to  the 
export  commission  house  in  New  York  to  whom  we  will  refer 
hereafter  for  the  sake  of  brevity  as  the  exporter,  wdth  the  un- 
derstanding that  the  exporter  will  buy  and  ship  the  goods  as 
the  agent  of  the  importer,  charging  the  importer  a  commission 
on  the  disbursements.  The  general  understanding  is  further 
that  he  will  buy  at  the  lowest  cash  export  prices  and  give  the 
importer  the  benefit  of  all  the  trade  and  cash  discounts  he  can 
get.  The  rate  of  commission  charged  varies  in  different  mar- 
kets and  varies  on  different  commodities.  On  large  bulk  lines 
running  into  considerable  money  it  is  generally  only  1  per  cent. 
On  the  ordinary  assorted  lines  of  hardware  or  machinery,  2^2 
per  cent.,  and  on  other  lines  as  high  as  5  per  cent.  Rarely  does 
the  commission  exceed  this. 

How  Orders  Are  Handled  by  Export  Houses. — "Let  us  take 
up  step  by  step  the  handling  of  an  order  received  from  abroad, 
until  the  goods  have  been  shipped  and  paid  for.  We  will  as- 
sume it  comes  from  a  wholesale  hardware  merchant  in  Australia 
and  is  an  indent  consisting  of  several  pages  of  assorted  hard- 
ware lines.  In  some  instances  the  buyer  has  specified  the  name 
of  the  maker  whose  goods  he  wants  bought.  On  other  items 
he  simply  specifies  the  goods  without  giving  the  name  of  any 
maker,  leaving  the  purchase  entirely  to  the  judgment  of  the 
buA'er  in  New  York.  In  some  instances  prices  may  -be  given 
either  as  a  limit  or  as  a  guide  to  the  buyer. 

"The  first  question  to  be  considered  on  receipt  of  the  order 
is,  How  does  the  importer  propose  to  pay  for  the  goods  and  the 
freight  which  must  be  generally  prepaid?,  etc.,  and  it  is  there- 
fore necessary  before  putting  the  order  into  work  to  have  an 
approximate  idea  of  its  value  and  the  credit  demanded,  for  the 
bnlk  of  the  importers  in  foreign  countries  expect  to  obtain 
credit  of  from  thirty  to  ninety  days. 

"In  a  well  established  export  commission  house  this  question 
of  credit,  on  the  bulk  of  the  orders  received  through  tlie  mails 
from  its  regular  customers,  is  a  simple  matter  to  decide  because 
the  commission  house  often  deals  with  the  same  firm  year  in  and 


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New  York, 


A.U.   Jones  &  Co., 
[       Jonesvtlle,  Ind. 
Dear  Sirs: 

Will  you  kindly  note  your  lowest  Export  prices  and 
discounts  opposite  each  item  specified  on  the  back  of  this  sheet. 

In  addition  please  answer  following  in  blank  spaces  opposite  each 
question; 


Best  Cash  Discount?      .  -  „-„ ..,. 

Where  are  the  goods  delivered? 

Cost,  if  any,  of  packages  or  cases  is? 

Time  required  to  complete  order  is? 

Yours  truly, 
Polio  .  678 

BOWRIKG  &  COMPAMY, 
Export  and  Import  Commission  Dept. 

THIS  IS  NOT  AN  ORDER 
PIea«e  rotum  this  form  with  your  Quotatioiu  noted  thereon. 


Form  l—Inqulry  from  Commission  House. 


I 


37  doaen  Ho.  5  Hand  Sawe,  Brown.  Packed  In  1/3  dozen  boxes. 

14  Inch    16  in.    18  In.   20  In.   33  In.   34  in. 
3  dozen    3  doz.   10  doz.   5  doz.   5  doz.  13  doz. 

10  dozen  Indian  Pattern  Axee,  3^  -  4^  Ibe. 
13   "  Australian  "     •   4^-6  lbs. 

12  dozen  #17-^  Adze  Eye  Eammers. 
6   "    #3     «    .     . 

13  "    #175  Box  Hammers 

4  dozen  #9   Bit  Braces 

3   ■   #13    " 

1   "   #96   Ratchet  Braces 


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EXPORT  COMMISSION  HOUSES  259 

year  out,  and  does  not  have  to  give  very  mucli  consideration  to 
the  ({uestion  of  credit,  once  an  importer's  standing  is  estab- 
lished. 

"If  the  character  and  standing  of  the  importer  is  such  as 
makes  the  credit  requested  satisfactory  to  the  exporter,  the 
order  is  then  turned  over  to  the  buyer  who  must  acknowledge 
its  receipt,  and  see  that  instructions  are  given  on  the  order 
with  regard  to  shipping,  insuring,  financing,  etc.  These  in- 
structions are  transferred  from  the  original  order  to  a  card 
index  w'here  the  shipping  and  finance  department  may  obtain 
information  when  the  goods  are  shipped  and  invoices  are  made 
out. 

Placing  Orders  with  Manufacturers. — "The  next  step  is  to 
decide  on  the  manufacturers  from  whom  the  goods  will  be 
bought.  In  a  number  of  cases  the  orders  are  for  firms  with 
whom  the  exporter  is  doing  business  right  along  and  from 
whom  he  knows  he  will  always  get  the  lowest  prices.  There 
will  be  other  items  on  the  order,  however,  which  may  be  made 
equally  well  by  several  factories,  on  which  he  will  have  to  shop 
as  the  market  may  fluctuate,  and  one  firm  may  be  cheaper  one 
month  and  another,  another. 

"The  next  step  in  the  work  for  the  buyer  is  to  have  written 
off  on  the  exporter's  blanks,  orders  to  the  manufacturers  and 
for  such  items  as  he  requires  prices  before  actually  placing  the 
order,  he  has  written  an  extra  carbon  copy  of  the  order  on  a 
special  blank,  which  is  used  as  an  inquiry  for  prices. 

"When  writing  out  the  order  another  carbon  copy  is  also 
made  on  heavy  paper  which  goes  to  the  shipping  clerk  to  en- 
able him  to  follow  up  the  manufacturer  and  attend  to  the  ship- 
ment. Blank  spaces  are  provided  on  the  back  of  the  shipping 
ticket  to  enable  the  shipping  clerk  to  keep  his  records.  When 
the  orders  are  all  placed  the  buyer  is  practically  through  with 
the  order,  if  everything  ordered  is  correctly  specified,  and  he 
has  not  made  any  mistakes  in  prices. 

"As  soon  as  the  order  is  sent  to  the  manufacturer,  the  car- 
bon copy  of  same,  which  is  now  the  shipping  ticket,  goes  to  the 
shipping  clerk.  He  must  ascertain  from  the  original  order 
what  instructions  there  are  regarding  the  shipment.  He  ruust 
keep  his  records  very  clear  and  his  shipping  tickets  separatea 


260  PRACTICAL  EXPORTING 

according  to  the  country  where  the  goods  are  going  and  accord- 
ing to  the  method  of  shipment  to  be  used. 

"In  course  of  time  a  steamer  will  begin  to  load,  and  he  then 
has  to  see  that  the  out  of  town  manufacturers  are  instructed  to 
ship  their  goods  to  New  York  at  once,  and  the  in-town  manu- 
facturers are  instructed  to  deliver  to  the  vessel.  He  must,  prior 
to  this,  have  made  an  engagement  with  the  steamship  company 
for  the  amount  of  freight  room  he  estimates  he  will  require. 
This  is  largely  a  matter  of  guesswork,  but  experience  enables 
him  to  judge  pretty  nearly  how  much  room  he  needs. 

"This  freight  is  engaged  either  directly  with  the  steamship 
company  or  in  very  many  cases  through  a  freight  broker,  whose 
business  it  is  to  keep  in  touch  with  the  changes  in  freight  rates 
and  the  opportunities  for  shipping  to  various  points.  After 
the  shipping  instructions  have  been  out  a  few  days,  the  clerk 
must  begin  to  look  up  such  orders  as  are  not  already  on  the  way 
to  the  steamer  and  find  out  the  reason  for  the  delay,  and  see  if 
he  cannot  hurry  them  forward. 

Bookkeeping-  Department  in  an  Export  House. — "Simul- 
taneously with  the  shipping  clerk's  work  the  bookkeeping  de- 
partment is  receiving  bills  from  the  manufacturers  for  the 
goods  shipped  and  arrangements  have  to  be  made  to  pay  these 
bills  at  such  a  time  as  will  insure  the  exporter  obtaining  the 
benefit  of  any  cash  discounts  allowed  by  the  manufacturer  for 
prompt  payment. 

"The  bookkeeping  department  must  see  that  the  quantity 
and  description  of  the  goods  on  the  bill  agree  with  the  items  in 
the  importer's  order  and  that  the  prices  charged  are  in  accord- 
ance with  the  arrangements  made  with  the  manufacturer.  It 
is  in  its  province  to  detect  any  errors  in  the  quantities,  price, 
etc.,  and  call  same  immediately  to  the  manufacturers'  attention 
so  that  the  matter  may  be  corrected  if  possible  before  the  goods 
have  actually  left  the  port. 

"When  the  steamer  is  eventually  loaded  and  ready  to  sail, 
the  invoicing  department  must  begin  making  up  the  invoices. 
The  shipping  clerk  being  the  one  who  knows  what  is  going  on 
the  steamer,  generally  gives  written  instructions  to  the  invoice 
department  with  a  rough  copy  of  the  bill  of  lading  and  at  the 
same  time  a  copy  of  these  instructions  goes  to  the  bookkeeping 


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N.mt„f,.m  26 up. 

TO   Petropolie  Hardnare  Corporation, 
PetropoliB, 

Ohio. 


BO>VKIISG    &    CO.  ^ 

IT    BATTERY    PLACE 

NE^v  YORK.         September  1 
srnp  AT  ONCE  TO      New  York 


15  dozen  "I  X  L"  Apple  Parer3 

LeBB  33  l/Zi 

20  "    "Honparell"  #5  Meat  Choppers 
3  "    "Nonpareil"  #7  "      " 

Less  85^  4  7^^ 

3  n    'Perfect"  Cherry  Stonera 

Lees  33  1/3^ 

1  only  "Unexcelled"  #208  Coffee  Hill 

6  "        "       #155   "    MillB 

Less  33  1/35? 

1  dozen  "Victory"  #907  Coffee  MillB 
Lees  25^ 

a  groBB  "Superior"  Can  Openers 

Less  10^ 

1  groBB   "Best"   Lemon  Squeezers 

1  dozen  "Newark"  Cork  Pullers  #3 

3  gross  "Princess"  Glass  Cutters 

100  sets  No.   GG  Nickeled  Sad  Irons 


at  $1.25  each 


at  65.00 
at  15.00 


at  11.10  per  doz 

at     7.50  per  gross 

at  17.60  per  gross 
at  28.10  per  doz. 
at     4.10  per  gross 
at       .83  per  sat 


Form  2 — Export  Commission  House  Order. 


c 


r 


INSTRUCTIONS,   TERMS   AND   CONDITIONS 


PACKING  Good,  to  be  cloidy  »nd  .«urely  packed  for  E.porl.  in  Le..t  Cut 

EXPRESS  PACKAGES       York'^cu/"'"''  '*''"''^  "''  "^'*"  """'  *"  '"'  '"  **"'  ^"'''°' 


NG 


FREIGHT  CHARGES 


,  Bowring  &  Co..  30  Wmi  Street.  Ne«p 
side  pBckige.  iDd  on    RfliIro«d    Bill   of 


Muil  in  ell  C8ie«  be  Prepaid  lo  New  York.      Even  ihou^h  your  price*  may  be  i.  o.  b.  New  Y( 
invoice  mud  (how  the  pricet  at  your  factory  sad  cartage  and  the  Ireighl  to  New  York  mud 


■bo«ra  in  addition 


BILLS  OF  UDING 

Sit<ned  Railroad  Bill  of  Lading  thoffing  our  S 
On  Carload  ibipmenli  Railroad  Bill  of  L«din| 

Ihipping  1 
i  lo  be  r, 

Mark  1 
larked 

™'Fo'r  IS'ort.  ijghter^e  Free." 

INVOICING 

Folio.  Dale  of  Order,  and  Mark  lo  appear  oi 

charge  lor  boxing.      Tlii.."  and  Ihe  callage  from 
Depol  lo  Ne«  York  mn.l  be  iho.n  on  your  invoi 

■!f! 

ta'ge  1. 
'^1 

ich  rautt  be  rendered  Id  Duplicate.     Memora 

■  boxing  or  crating.     You  muil  make  a  lepara 
D  Railroad  Depot  and  the  freight  from  Railroi 

All  Cub  DUcounU  moll  be  deducied  in 
bill,  in  Ihe  prucribed  lime. 

Ihcame 

h..d 

-riling  ...h,  bod,  ofibe  invoice,  a.  .e  .ay. 

The  woid  C„h  di.couni  mu.l  ool  be  o.ed.  > 

imply  Ih. 

c  pcrc. 

eoiage.l.led. 

PRINTING  MAHER 
DESCRIPTION  OF  GOODS  b,„1° 


An  primed  or  Bdverii.ing  materifl!  encloied  wiih  goodi  mud  be  apecified  on  invoice  and  net  weight  of  aame 

Supplier,  mud    be  prepared  lo  pay  ihe  eudom  duly  of  6d.  per  ""lb.  in    Audr8!i''a  and  id,  per    lb.  in  New 
land  and  2d.  per  lb    in  Souih  Africa  on  any  eucb  advcriidog  matter,  unleit  lame  ii  acked  for  on  our  order. 


I 


COUNTRY  OF  ORIGIN 


United  Siaiet.     If  il 


appeera  any  name,  trade-mark,  brand,  name  of  plat 
by  the  country  of  origin,  i.  e.,  "Made  in  United  Stat 
:d  Stale*  of  America.'^  are  iufficient  after  the  name  o 
mplied  with,  gooda  are  liable  to  confiication  by  the  Ai 


PRISON  MADE  GOODS     |^P^Mrt^|^^^21rSrl°i^Hi?^ 


Trade  and  CuKomt,  Melbourne  Statutory  Rulea,  1910.  No.  17.     Copies  oi 
- "  -        -■•'-•-.  -        -        -    '"  id  Labor.  Wa.h; 

17  A-Audralia 
Tariff  Series  17  B— Audralio,  May,  1910. 


egulationi  dated  March  14,  1910.  iuued  by  ihe  Dt; 

"      ■         '  these  tegulaiioDi  can  be  obi 

nglon.   D.  C- 

Tariff  Serie*  17  A-Audralia.  Oct..  1902. 


Manufacturers  guarantee  in  accepting  this  order»  that  the  prices  they  will  charge  are  their 

lowest  cash   Export  Prices  and  that   they  have   no  arrangements  covering  the 

market  to  which  these  goods  are  to  he  shipped  which  prevent  this. 

Goods  shipped  contrary  to  terms  of  this  order  at  your  risk. 


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EXPORT  COMMISSION  HOUSES  261 

department,  which  picks  out  from  its  files  the  corresponding 
manufacturers'  bills.  These  bills  are  then  turned  over  to  the 
invoicing  department,  which  starts  to  make  up  its.  various  docu- 
ments, referring  to  the  card  index  for  the  clients'  instructions 
as  to  the  way  the  draft  is  to  be  drawn  and  the  way  the  insur- 
ance and  other  matters  are  to  be  attended  to. 

"There  are  three  or  four  operations  going  on  at  the  same 
time  the  minute  a  steamer  has  stopped  taking  cargo  and  the 
exporter  is  read}'  to  make  up  his  final  papers. 

"The  shipping  clerk  has  to  see  that  the  freight  rates  charged 
are  correct,  also  that  the  figuring,  etc.,  is  0.  K.,  and  to  then  see 
that  payment  is  made  to  the  steamship  company  promptly, 
after  which  his  work  in  connection  with  that  particular  ship- 
ment is  finished. 

Invoicing  Purchases  on  Commission. — "AYhere  goods  are 
bought  on  commission,  and  this  is  the  form  of  export  in  which 
we  are  more  particularly  dealing,  it  is  customary  for  the  ex- 
porter to  send  with  his  own  invoice  a  copy  of  the  manufac- 
turers '  bills  to  him,  and  if  this  is  done  the  exporter 's  invoice  con- 
sists of  very  little  more  than  a  tabulated  statement  showing  the 
shipping  marks,  packages,  name  of  manufacturers,  etc. 

"These  are  totaled,  and  then  the  various  charges  for  cartage, 
freight,  insurance,  etc.,  are  added  on  and  the  exporter's  commis- 
sion charged  on  the  total.  In  some  countries  where  it  is  not 
the  practice  of  the  exporter  to  send  out  the  manufacturers' 
original  bills,  the  entire  bill  of  the  manufacturer  is  copied  of? 
by  the  exporter  on  his  own  headings  and  then  the  charges  added 
at  the  end. 

"When  the  invoice  is  fully  made  up  he  then  has  to  attend  to 
the  insurance  and  the  next  work  in  connection  with  the  ship- 
ment is  that  of  the  finance  department." 

Mainstay  of  Commission  House  Business. — Most  export  com- 
mission houses  depend  for  the  bulk  of  their  business  on  trade 
in  certain  staple  commodities  which  although  sold  on  a  close  mar- 
gin are  yet  so  much  easier  to  handle  that  business  in  them  in 
preferred  to  orders  for  a  great  variety  of  assorted  manufac- 
tured goods.  This  was  confessed  by  "William  C.  Downs,  at  that 
time  engaged  in  the  export  commission  business,  who  wrote  in 
the  Quarterly  Journal  of  Economics,  of  Harvard  University,  in 


262  PRACTICAL  EXPORTING 

regard  to  commission  houses  engaged  in  the  Latin  American 
trade:  "The  field  narrows  for  the  commission  merchant.  It 
is  a  serious  question  whether  under  the  present  method  of  trade 
he  can  afford  to  handle  and  finance  the  thousand  and  one 
articles  not  worthy  of  specification  that  go  to  make  up  45  per 
cent,  of  our  entire  exports,  if  his  trade  is  limited  to  them  by 
the  elimination  Of  the  bulk  or  staple  articles  which  require 
little  labor  to  sell  and  mount  quickly  in  value.  Up  to  the  pres- 
ent time  the  commission  merchant  has  earned  on  the  large  turn- 
over in  staple  articles,  sold  in  large  quantities,  sufficient  to  en- 
able him  to  cover  his  general  running  expenses  and  accept  and 
execute  orders  for  general  merchandise  on  the  same  basis  of 
profit  or  commission  as  the  bulk  goods.  It  does  not  require 
any  more  labor  or  time  to  secure  an  order  for  10,000  cases  of 
kerosene  valued  at  $10,000  or  .$11,000  than  it  does  to  take  an 
order  for  500  dozen  of  padlocks  worth  only  $500.  In  the  first 
case  the  commission  merchant  might  earn  $250,  in  the  second 
case  only  $12.50.  In  order  to  gain  a  sufficient  turn-over  in 
general  merchandise  sold  in  small  quantities  he  would  be 
obliged  to  increase  largely  his  selling  force  and  also  his  clerical 
staff,  as  the  detailed  work  of  handling  such  business  is  enor- 
mous. Such  expansion  would  involve  a  great  increase  in  expen- 
diture which  could  not  be  undertaken  under  the  prevailing  per- 
centage of  profit." 

The  preference  of  the  commission  houses  for  bulk  business 
will  be  appreciated  by  many  a  manufacturer  by  a  consideration 
of  what  an  order  for,  say,  $25,000  worth  of  his  goods  may  in- 
volve in  the  way  of  clerical  labor,  number  of  items,  complexity 
of  description,  sizes,  etc.,  etc.  $25,000  worth  of  assorted  hard- 
ware, for  example,  would  in  most  cases  involve  many  order 
pages  filled  with  details.  On  the  other  hand,  $25,000  worth  of 
cotton  piece-goods,  perhaps  for  China,  would,  as  sold  by  the  ex- 
porter, involve  only  an  exchange  of  cablegrams,  a  single  line  of 
an  order  form  and  a  single  entry  in  the  books.  The  commis- 
sion house's  profit  on  $25,000  worth  of  hardware  would  not, 
at  most,  be  over  $625.  If  the  commission  on  a  similar  amount 
of  cotton  piece  goods  were  only  one-third  as  much  the  commis- 
sion house  would  probably  regard  the  latter  transaction  as  not 


EXPORT  COMMISSION  HOUSES  263 

only  more  desirable  but  as  more  profitable,  because  of  the  less 
labor  involved  and  the  minimum  risk  of  mistake,  as  well  as 
minimum  credit  and  other  risks. 

EXPORT  HOUSES  AS  BUYERS  AND  SHIPPERS 

It  is  as  buyer  and  shipper  of  goods  that  the  export  commis- 
sion house  is  usually  first  introduced  to  manufacturers.  A  re- 
quest is  received  for  low^est  export  prices,  then  along  comes  an 
order  "for  export"  with  detailed  instructions.  Highly  agree- 
able this.  Why  not  get  more  of  such  business?  Where  do 
these  orders  come  from?  Do  they  originate  in  New  York  or 
where  ? 

Origin  of  Order. — Some  export  houses,  by  no  means  all,  will 
buy  for  their  own  account  small  sample  orders  of  new  goods, 
after  eflfective  solicitation.  Such  samples  will  be  sent  out — 
and  invoiced — to  branches  or  intimately  allied  customers,  as 
samples.  No  such  houses  buy  large  quantities  of  any  kind  of 
goods  until  their  foreign  connections — customers  or  own  branch 
houses — have  advised  or  instructed  such  purchases.  A  large 
proportion  of  the  orders  for  manufactured  goods  received  by 
these  houses  from  foreign  buyers  has,  nowadays,  actually  been 
originated  by  the  efforts  of  manufacturers  themselves,  usually, 
indeed,  through  efforts  entirely  unknown  to  the  exporter.  Ev- 
ery mail  from  foreign  countries  brings  to  export  commission 
houses  orders  for  goods  made  by  manufacturers  of  whom  tlhes© 
houses  have  never  before  heard,  whose  very  addresses  have  to 
to  be  ferreted  out  with  some  difficulty.  On  the  other  hand,  the 
manufacturer  who  receives  orders  from  these  houses  rarely 
knows  the  name  of  the  actual  foreign  buyer,  sometimes  does  not 
even  know  the  country  for  which  the  goods  are  destined. 

The  Profession  of  Export  Buyer. — In  large  export  commis- 
sion houses  there  is  sometimes  one  chief  buyer  by  whom  all 
orders  are  placed.  Sometimes  the  heads  of  several  different  de- 
partments place  their  own  orders,  independently  one  of  an- 
other. At  any  rate,  in  most  large  houses  there  are  several  more 
or  less  independent  departments  doing  business  with  different 
foreign  territories,  or  sometimes  specialized  according  to  the 
nature   of  the   business   transacted,   for   example,   engineering. 


264  PRACTICAL  EXPORTING 

chemicals,  etc.,  and  the  manufacturer's  representative  who  so- 
licits business  from  these  concerns  finds  it  necessary  to  see  and 
to  know  all  these  heads  of  departments. 

That  personal  acquaintance  of  the  seller  with  the  heads  of 
the  departments  and  buyers  is  highly  desirable  on  many  ac- 
counts; for  example,  because  open  orders  are  sometimes  re- 
ceived from  abroad  which  do  not  specify  particular  manufac- 
turers from  whom  the  supplies  must  be  obtained  but  leave  the 
purchase  to  the  judgment  of  the  exporter.  This,  however,  is  not 
the  rule,  for  doubtless  eight  or  nine  out  of  ten  orders  received 
name  the  special  goods  and  their  manufacturer  which  alone  will 
be  acceptable  to  the  foreign  buyer.  None  the  less,  the  personal 
element  in  the  export  commission  house  is  an  important  matter 
to  the  salesman  soliciting  this  business. 

The  reputation,  salary,  perhaps  very  position  of  the  buyers  in 
these  houses  depend  on  the  individual's  knowledge  of  sources  of 
supply  and  competing  prices,  and  his  shrewdness  in  buying  ad- 
vantageously. Strenuous  efforts  to  secure  the  lowest  quotations 
are  therefore  the  rule.  The  temptation  may  be  strong  some- 
times to  get  them  through  misrepresentation  of  facts,  for  exam- 
ple, as  to  country  of  destination.  As  an  illustration,  take  this 
actual  ease  which  is  by  no  means  exceptional :  If  an  export 
house  has  reason  to  believe  that  a  manufacturer's  goods  for  a 
certain  foreign  country  from  which  an  order  has  been  received 
are  controlled  by  an  exclusive  agency  in  or  for  that  country, 
quotations  will  be  solicited  by  the  exporter  nominally  for  ship- 
ment to  some  other  country  where  it  is  not  thought  that  any 
agency  arrangements  of  the  manufacturer  will  interfere  with 
naming  the  lowest  possible  prices. 

Protecting  Agents  While  Selling  Exporters. — The  last  sen- 
tence introduces  a  problem  that  puzzles  many  a  manufacturer, 
old  as  well  as  new  in  export  experience:  How  protect  exclu- 
sive agents  in  foreign  markets,  yet  keep  the  good  will  and  the 
trade  of  the  export  commission  houses — for  other  if  not  for  the 
same  territories?  It  goes  without  saying  that  no  export  house 
will  Be  unreservedly  delighted  to  learn  of  any  exclusive  foreign 
agency — unless  the  exporter  controls  it  himself.  The  establish- 
ment of  such  connections  in  other  lands  is  bound  sooner  or  later 
to  restrict  the  volume  of  business  of  the  export  commission  man, 


EXPORT  COMMISSION  HOUSES  265 

cut  down  his  prestige  as  a  buyer,  if  not  his  profits,  probably 
force  him  to  an  annoying,  perhaps  fruitless  search  for  a  substi- 
tute, and  involve  efforts  of  similar  description  to  get  that  sub- 
stitute accepted.  Manufacturers,  therefore,  often  show  some 
timidity  in  acknowledging  to  export  houses  the  existence  of 
foreign  agencies.  This  is  a  mistake.  The  manufacturer  can- 
not perch  on  two  stools  at  the  same  time.  If  he  has  an  exclusive 
agency  in  any  foreign  market  he  must  absolutely  protect  that 
agent.  Since  it  is  usually  acknowledged  that  the  route  to  the 
largest  possible  export  trade  lies  in  the  establishment  of  the 
best  obtainable  agencies  in  large  markets,  it  is  sometimes  thought 
that  business  with  export  commission  houses  must  be  abandoned. 
But  this  result  need  not  invariably  follow. 

An  effort  is  sometimes  made  to  straddle  the  horns  of  the 
dilemma  by  providing  in  contracts  for  exclusive  agencies  for 
certain  territories  that  a  commission  will  be  paid  on  all  orders 
received  from  the  territories  in  question  through  no  matter  what 
.channels — excepting  only  where  orders  come  through  New  York 
exporters  when  destination  of  the  goods  is  unknown.  This  is 
not  likely  to  be  satisfactory  to  foreign  agents  of  experience. 
Commission  houses  have  been  known  to  supply  goods  supposed 
to  be  exclusively  controlled  at  much  less  than  agents  could  offer 
— even  at  cost  to  themselves.  Manufacturers  have  been  known 
suddenly  to  become  deaf  and  blind  when  an  order  has  been  ten- 
dered by  a  good  exporter,  and  forget  to  enquire  where  the  goods 
were  going.  No  agent  of  the  desirable  description  will  or  should 
be  contented  with  such  a  contract.  If  he's  worth  having,  he's 
worth  protecting — and  the  protection  should  b'e  real,  not  a  sham. 

For  the  manufacturer  whose  goods  are  controlled  by  certain 
exclusive  agents  there  is  but  one  course  to  follow  with  the  com- 
mission houses:  He  must  accept  no  orders  whose  destination  is 
not  specified.  If  he  finds  that  a  commission  house  has  deceived 
him  in  stating  destination  of  an  order  he  should  not  mince  words 
in  expressing  his  sentiments  to  the  offender  and  in  reporting  the 
facts  to  the  Exporters'  and  Importers'  Association  and  other- 
wise assuring  them  reasonably  effective  publicity.  ^Meanwhile 
the  exclusive  agent  should  receive  his  usual  commission — and  an 
apology. 

It  is  not  rare  that  a  commission  house  when  tendering  an 


266  PRACTICAL  EXPORTING 

order  is  asked  as  to  country  and  port  of  destination,  even  name 
of  buyer.  Several  important  manufacturers  will  consider  no 
orders  without  these  particulars,  reserving  their  rights  to  accept 
or  decline,  even  to  vary  prices  at  which  orders  will  be  filled  ac- 
cording to  circumstances  indicated  by  such  information.  These 
manufacturers  have  succeeded  in  so  firmly  entrenching  their 
lines  that  the  exporters  are  forced  to  do  business  as  they  dictate. 
It  should  be  the  aim  of  every  manufacturer  so  to  establish  his 
goods  that  only  with  the  greatest  difficulty  can  anything  else  be 
made  to  supplant  them.  The  manufacturers  just  referred  to, 
while  insisting  upon  the  control  of  their  own  export  business, 
manage  to  maintain  friendly  relations  with  the  export  houses. 
They  insist  that  their  policies  be  recognized.  They  point  out  the 
uselessness  of  opposition,  the  possible  advantage  of  cooperation. 
If  they  have  absolutely  to  decline  an  order  from  one  source,  it 
is  done  tactfully.  If  another  is  accepted  but  only  at  an  unusu- 
ally high  price,  it  is  frankly  explained  that  an  agent  must  re- 
ceive his  commission,  that  various  contracts  cover  varying  condi- 
tions. If  the  exporter  is  recalcitrant  and  refuses  peremptorily 
to  disclose  the  name  of  his  customers,  the  manufacturer  is 
usually  able  from  sundry  indications  his  quick  mind  has  noted 
to  hazard  a  shrewd  guess  as  to  where  the  goods  are  wanted — 
and  a  line  to  the  agent  on  the  ground  will  probably  bring  the 
self-same  order  through  some  other  channel. 

Thus  it  is  really  the  manufacturer  who  has  the  whip  hand 
over  the  commission  house — and  he  should  not  surrender  his 
advantage.  It  may  happen  that  a  commission  house  has  itself 
been  made  exclusive  agent  for  a  line  in  a  certain  territory,  but 
that  orders  tendered  by  the  same  house  for  another  territory 
may  have  to  be  refused.  The  heads  of  all  large  commission 
houses  will  at  once  recognize  a  manufacturer's  position,  even  if 
underlings  in  the  same  houses  take  an  obnoxious  stand.  Frank- 
ness, tact,  firmness,  will  almost  always  result  in  the  continuance 
of  friendly  relations  between  manufacturer  and  exporter.  In- 
deed the  manufacturer  may  often  suggest  to  his  foreign  agents 
the  propriety  of  submitting  some  if  not  all  orders  through  cer- 
tain commission  houses  whom  it  is  wished  especially  to  favor. 
All  of  these  features  of  business  may  be  effectively  impressed  on 
the  export  houses. 


EXPORT  COMMISSION  HOUSES  267 

Execution  of  Commission  House  Orders. — In  principle  the 
export  commission  house  is  the  manufacturer's  customer.  It  is 
only  the  instructions  regarding  the  making  and  marking  of  the 
goods  and  their  shipment,  as  given  by  the  exporter,  which  have 
to  be  followed  by  the  manufacturer.  However,  the  latter  is  by 
no  means  relieved  of  the  necessity  of  giving  special  and  intelli- 
gent attention  to  these  orders.  The  goods  must  be  made  and 
packed  especially  for  export  and  many  another  detail  must  re- 
ceive precisely  the  same  attention  as  though  the  manufacturer 
himself  were  to  do  the  actual  export  shipping.  Invoices  for 
Australia  and  some  other  markets  must  be  prepared  and  attested 
by  the  manufacturer  with  all  the  formalities  and  peculiarities 
required  in  the  case  of  any  shipment  to  such  markets,  even 
though  they  are  forwarded  through  and  financed  by  the  New 
York  export  house. 

AS  AGENTS  OR  INTRODUCERS  OF  NEW  GOODS 

To  the  American  manufacturer  ambitious  for  more  export 
business,  the  functions  of  the  export  houses  as  possible  foreign 
agents  for  his  goods  seem  most  interesting  and  important ;  their 
facilities  and  abilities  for  introducing  new  articles  or  lines  seem 
questions  of  chief  moment.  The  manufacturer  is  perhaps  quite 
sure  to  think,  "Here  is  a  house  which  does  nothing  but  export; 
it  ships  large  quantities  of  goods.  It  must  know  all  about  for- 
eign trading,  must  have  a  lot  of  customers  in  foreign  countries. 
Surely  it  can  do  a  big  business  in  my  line."  The  growth  of  the 
practice  of  acting  as  foreign  sales  agents  for  manufacturers  in 
one  or  in  many  markets  is  one  of  the  most  notable  features  of 
export  commission  house  practice  to-day.  It  seems  to  have  been 
developed,  partly  in  order  to  forestall  the  direct  efforts  of  manu- 
facturers, but  chiefly  no  doubt  in  the  hope  of  adding  to  the 
rather  meager  profits  of  these  houses  from  the  straight  commis- 
sions paid  by  their  foreign  customers. 

Conflict  in  Functions  of  Export  Houses. — The  very  basis  of 
export  commission  business  is,  as  we  have  seen,  the  position  of 
such  a  house  as  buyer  for  foreign  merchants.  Such  a  buyer,  it 
would  seem,  must  be  supposedly  independent  and  devoted  to 
securing  for  his  foreign  clients  the  goods  they  order  on  terms 
most  advantageous  to  them. 


268  PRACTICAL  EXPOBTING 

As  the  special  agent  for  an  American  manufacturer  endeavor 
ing  to  promote  the  sale  of  a  particular  line  in  which  the  export  - 
commission  house  is  obviously  interested,  presumably  because 
more  money  is  made  on  it  than  from  commissions  paid  by  foreign 
customers  on  general  orders,  the  commission  house  is  apparently 
trying  to  maintain  under  the  same  roof  two  distinctly  opposed 
interests. 

It  is  possible,  perhaps,  to  carry  on  both  operations  satisfac- 
torily at  the  same  time.  The  export  houses  invariably  claim  it  is 
so.  However,  it  is  notable  that  some  of  these  houses  apparently 
recognize  the  difficulty  of  harmonizing  their  functions  as  inde- 
pendent buyers  and  as  special  agents  for  particular  lines  by 
operating  in  foreign  markets  under  different  firm  or  company 
styles — executing  orders  on  commission  as  one  concern  and  pre- 
senting special  samples  and  urging  particular  goods  under  an- 
other style.  Too  much  emphasis  should  not  be  laid  upon  this 
apparent  conflict  of  functions,  for  it  is  so  common  as  to  be  the 
rule  with  British  and  other  European  exporters  as  well  as 
American. 

FOREIGN  AGENTS  OF  COMMISSION  HOUSES 

Most  of  the  leading  export  commission  houses  maintain  cer- 
tain branch  houses  or  employ  local  agents  in  foreign  markets, 
or  send  out  their  own  traveling  salesmen  from  this  country. 
For  what  purpose  ?  First,  to  keep  in  more  intimate  touch  with 
markets  and  customers,  to  watch  conditions,  credits,  etc.,  and 
extend  their  circle  of  customers  when  possible.  Second,  as 
agents  fur  the  introduction  of  new  lines. 

As  such  agents,  however,  they  may  operate  in  two  different 
ways.  Their  interests  may  be  general  or  impersonal,  that  is,  an 
effort  to  bring  to  the  attention  of  buyers  who  entrust  them  with 
the  execution  of  their  orders  for  American  goods  of  all  sorts, 
the  advantages  of  other  things  made  in  this  countr}'  which  cus- 
tomers have  not  previously  handled,  purchases  of  which,  if  buyers 
can  be  induced  to  take  them  up,  will  add  to  the  total  volume  of 
the  business  and  hence  of  the  profits  of  the  commission  house. 
Or,  as  agents,  the  foreign  connections  of  the  commission  houses 
on  tlie  other  hand  may  interest  themselves  in  special  lines  for 


EXPORT  COMMISSION  HOUSES  269 

which  exceptionally  profitable  agency  arrangements  have  been 
concluded  with  manufacturers. 

Commission  Houses'  Branches  Abroad. — No  American,  Brit- 
ish, or  any  other  professional  export  house  has  its  own  foreign 
branch  establishments  everywhere.  Such  a  house  may  establish 
branch  offices  in  certain  special  markets  where  the  growth  or 
conditions  of  business  may  have  made  that  proceeding  desirable. 
Again,  a  few  houses  may  have  a  number  of  foreign  branches 
devoted  to  operations  in  specialized  lines.  It  is  to  be  noted, 
however,  that  some  large  export  houses  have  no  foreign  branches. 

In  some  foreign  markets  a  branch  may  be  thought  necessary 
in  order  the  better  to  handle  imports  for  incompetent  customers 
unfamiliar  with  or  not  equipped  for  importing  formalities. 
Sometimes  such  branches  are  necessary  because  of  the  specula- 
tive character  of  a  good  deal  of  the  business  carried  on.  Some 
such  considerations  may,  for  example,  apply  to  certain  kinds  of 
business  done  by  export  houses  in  the  markets  of  the  Far  East. 

Commission  Business  Varies  with  Territories. — It  is  always 
to  be  remembered  that  the  character  of  the  business  done  by  any 
general  export  commission  house  varies  radically  according  to 
the  territories  in  which  such  a  house  operates.  In  one  foreign 
market  buyers  jvho  entrust  their  orders  to  a  certain  export  com- 
mis'sion  house  may  almost  exclusively  be  interested  in  groceries 
and  provisions.  In  another  foreign  market  it  may  happen, 
through  chance  or  the  force  of  circumstances,  that  buyers  who 
patronize  the  same  export  commission  house  are  for  the  most 
part  engaged  in  the  hardware  business.  Because  an  export  com- 
mission house  has  two  or  three,  or  eight  or  ten,  foreign  offices  it 
does  not  by  any  means  follow  that  the  business  done  bj^  each  of 
those  foreign  offices  is  identical,  or  that  the  business  of  one  is 
comparable  in  character  or  volume  to  the  business  of  another. 

A  certain  large  New  York  export  house  has  branches  in  South 
Africa  and  Australia.  In  South  Africa  it  represents  a  large 
American  automobile  manufacturer  and  its  business  nowadays 
is  largely  confined  to  that  popular  car,  and  to  accessories  and 
allied  lines.  However,  the  New  York  house  in  question  does  not 
control  the  agency  for  the  same  motor  car  for  Australia,  and  as 
8  matter  of  faef  its  branch  in  Australia  does  little  or  nothing  in 


270  PRACTICAL  EXPOBTING 

automobiles,  but  is  engaged  in  an  entirely  different  kind  of  busi- 
ness. 

Another  prominent  New  York  exporter  has  branches  in 
Shanghai,  China;  Havana,  Cuba;  Buenos  Aires,  Argentine  Re- 
public; and  Sydney,  Australia.  In  Shanghai  its  business  is 
largely  in  the  way  of  cotton  piece  goods;  the  Havana  business 
consists  of  coal  and  steel;  in  Buenos  Aires  it  is  industrial  and. 
agricultural  machinery;  in  Sydney,  boots  and  shoes,  hardware, 
turpentine  and  general  lines.  It  would  appear,  therefore,  that 
in  appraising  the  value  of  an  export  commission  house's  services 
in  any  connection  or  in  any  direction,  something  more  is  neces- 
sary than  a  reference  to  the  rating  of  the  house  in  the  commer- 
cial agency  books. 

Foreign  Branch  Manager  Supreme. — The  manufacturer  has 
further  to  consider  that  the  manager  of  a  foreign  branch  of  an 
American  export  commission  house  is  supreme  in  his  field.  He 
has  not  been  entrusted  with  the  great  responsibility  involved  in 
the  management  of  such  a  branch  unless  his  principals  have 
been  prepared  to  rely  upon  his  judgment  and  in  general  abide 
by  his  decisions  as  a,ffecting  business  in  the  field  under  his 
jurisdiction.  His  New  York  headquarters  can  do  little  more 
than  urge  and  advise  him.  They  cannot  impose  upon  him  the 
sale  of  goods  in  which  he  is  not  interested,  they  can  hardly  even 
dictate  his  policy  in  operating  the  branch  for  which  he  is  re- 
sponsible. As  a  matter  of  fact  the  New  York  headquarters  can 
do  little  more  than  write  letters  as  to  the  general  conduct  of 
business,  even  though  the  discharge  or  recall  of  the  foreign 
manager,  in  case  of  necessity,  lies  in  its  power. 

Travelers  for  Export  Houses. — The  traveling  salesman  for 
an  export  commission  house  is  the  "combination"  salesman  in 
the  most  extreme  sense.  He  can  and  usually  does  carry 
samples,  a  lot  of  them,  from  brooms  to  motor  cars,  padlocks  and 
hams,  patent  medicines  and  safety  pins,  cotton  goods  and 
leather  belting,  jewelry  and  boots  and  shoes.  These  salesmen 
can  and  do  get  business  in  most  lines  that  are  saleable  at  all  in 
the  markets  visited,  but  in  principle  this  sort  of  representation 
is  a  totally  insufficient  introduction  for  any  special  individual 
line,  particularly  so  if  the  manufacturer  has  been  induced  to 
contribute    to    the    expenses    of    such    a    representative's    trip. 


EXPORT  COMMISSION  HOUSES  271 

Very  especially  is  it  to  be  doubted  if  any  representative  of  an 
export  commission  house  is  able  to  do  even  partial  justice  to 
lines  requiring  considerable  technical  knowledge. 

In  an  address  before  the  American  Hardware  Manufac- 
turers' Association  already  quoted,  the  head  of  a  large  export 
house  who  perhaps  better  than  any  other  man  in  the  trade  is  in 
position  to  speak  on  this  subject,  offered  this  advice  to  manufac- 
turers: "I  do  not  deny  that  there  are  some  manufacturers 
among  you  who  produce  lines  of  goods  that  need  special  treat- 
ment and  are  of  such  a  unique  character  or  technically  com- 
plicated that  it  needs  other  than  every  day  business  education 
to  introduce  and  sell  them,  such  as  machinery  or  technical  lines 
in  general.  I  do  not  believe  the  ordinary  export  merchant  is 
capable  of  doing  justice  to  a  manufacturer  who  produces  any- 
thing in  this  line  of  goods.  It  needs  some  one  from  the  factory 
with  the  deep  knowledge  that  the  article  requires  to  lay  the 
foundation  for  that  kind  of  business  in  foreign  countries.  But 
b}^  admitting  this  I  do  not  admit  that  the  exporter  could  not 
offer  a  helping  hand  and  still  play  an  important  part  in  fur- 
ther development." 

In  this  connection  Welding  Eing,  whose  firm  exports  chiefly 
to  Australasia,  has  remarked:  "There  are  very  many  advan- 
tages in  conducting  business  through  the  medium  of  a  commis- 
sion house.  Of  necessity,  such  houses  are  compelled  to  have 
their  branches  in  the  larger  cities  of  Australasia  and  in  addition 
their  regular  agents  at  other  ports  and  their  traveling  repre- 
sentatives who  visit  the  smaller  towns  at  regular  periods.  By 
means  of  these  agencies  they  become  thoroughly  acquainted 
with  their  buyers,  know  their  clients,  how  to  approach  them  and 
the  class  of  goods  they  rec^uire  as  well  as  the  volume  of  sales 
that  can  be  effected.  .  .  .  On  the  other  hand,  in  dealing  with 
large  importers  it  may  be  a  question  of  whether  the  commission 
house  can  put  its  knowledge  and  views  before  such  a  buyer  with 
sufficient  clearness  to  warrant  his  taking  up  a  large  quantity  of 
goods  and  stocking  them  for  general  trade." 

Also  note  the  following  from  John  F.  Fowler,  second  vice- 
president  of  W.  R.  Grace  &  Co.:  "The  manufacturer,  par- 
ticularly of  specialties  or  machinery  lines,  should  also  send  his 
experienced  men  to  study  the  foreign  markets.     They  should 


272  PRACTICAL  EXPORTING 

be  technically  familiar  with  their  wares,  preferably  combining 
a  practical  factory  knowledge  of  them.  These  missionaries  can 
inaugurate  business  if  their  lines  are  feasible  ones.  The  busi- 
ness initiated  by  a  special  traveler  can  be  followed  up  by  the 
exporter's  local  representative  without  further  expense  to  the 
manufacturer,  if  reasonable  business  pursuit  will  suffice  for 
this ;  but  if  it  is  a  house-to-house  specialty,  or  an  article  similarly 
demanding  much  time  and  perhaps  propaganda  expense,  the 
merchant  could  not  be  expected  to  devote  so  much  energy  to  it. 
That  is  a  case  for  the  special  man." 

Relative  Importance  of  Exporters  in  Foreig-n  Markets. — 
The  varying  character  of  the  trade  of  the  exjjort  commission 
houses  in  different  markets  has  just  been  explained.  It  is  nec- 
essary also  for  manufacturers  to  differentiate  these  houses  on 
the  basis  of  their  varying  importance  in  the  trade  of  different 
markets  where  they  may  be  doing  business.  One  export  house 
may  be  "top  of  the  heap"  in  one  foreign  country,  but  the  same 
house  may  rank  only  fifth  or  tenth  among  American  houses  do- 
ing business  in  another  foreign  market.  This  warning  should 
be  committed  to  memory  by  every  manufacturer  who  does  busi- 
ness with  these  concerns.  No  one  export  house  does  business  all 
over  the  world,  no  one  export  house  has  equal  facilities  in  every 
market  where  it  does  operate. 

sThe  absurdity  of  granting  export  agencies  to  a  New  York 
house  for  the  whole  world  or  for  markets  where  no  business  in 
similar  or  allied  goods  is  actually  carried  on,  is  evident.  The 
manufacturer  who  may  contemplate  extending '  agencies  to 
houses  of  this  character  must  learn  what  are  the  actual  facilities 
of  the  leading  houses,  relating  to  his  special  goods,  in  each  mar- 
ket where  each  operates.  He  will  not  find  it  difficult  to  learn 
about  the  character  of  the  business  carried  on  by  each  concern 
under  consideration.  His  first  recourse  will  naturally  be  cross 
examination  of  the  firm  by  whom  or  to  whom  agency  arrange- 
ments are  proposed.  However,  since  the  personality  of  for- 
eign resident  managers  of  branch  houses  and  of  foreign  travel- 
ing men  is  so  important  an  element  in  the  probable  success  of 
agency  arrangements,  it  is  highly  desirable  to  make  the  per- 
sonal acquaintance  of  such  representatives  whenever  possible 
to  do  so.     As  bearing  out  the  writer's  position  as   above  set 


EXPORT  COMMISSION  HOUSES  273 

forth,  note  the  following  from  a  highly  successful  export  man- 
ager, C.  A.  Richards  of  New  York : 

"Don't  make  the  mistake  of  thinking  that  because  an  ex- 
port commission  house  looks  busy  and  has  a  large  trade  that 
they  are  the  people  to  handle  your  goods  in  every  market. 
There  is  no  commission  house  in  New  York  to-day  who  stands 
at  the  head  of  the  business  in  every  market.  Each  commission 
house  has  from  one  to  six  markets  where  they  do  the  bulk  of 
their  business  and  where  they  stand  among  those  at  the  top  of 
the  trade,  and  certain  commission  houses  have  for  years  spe- 
cialized in  business  on  the  Continent  and  know  nothing  about 
South  America,  others  have  specialized  in  English  Colonies, 
others  have  specialized  in  Spanish  speaking  countries,  others  in 
the  Far  East.  No  manufacturer  can  afford  to  have  his  inter- 
ests handled  entirely  by  any  one  commission  house." 

Cooperation  with  Manufacturers. — Beyond  any  question  the 
greatest  advantage  which  established  and  experienced  export 
commission  houses  of  the  best  class  offer  to  the  expansion  of 
American  export  trade  lies  in  a  more  intimate  cooperation  be- 
tween manufacturer  and  exporter.  AVe  have  already  noted  the 
exporter's  facilities  for  distributing  a  manufacturer's  litera- 
ture to  foreign  customers  who  buy  allied  articles. 

The  advantage  to  be  found  in  many  cases  by  the  foreign  trav- 
eling salesman  for  an  American  manufacturer  in  working  with 
the  local  foreign  branches  of  commission  houses  is  very  great. 
Through  such  work  the  managers  or  local  salesmen  of  such 
branches  are  personally  enthused  over  the  special  line,  are  edu- 
cated in  its  possibilities  and  its  sales  arguments,  and  are  put  in 
position  to  continue  the  development  of  business  during  the 
temporary  or  prolonged  absence  of  the  manufacturer's  own 
representative. 

The  salesman  on  arrival  in  a  foreign  market  is  introduced  by 
the  agent  for  the  American  export  house  to  concerns  whose 
orders  that  house  is  willing  to  finance— usually  the  best  con- 
cerns in  the  place.  All  sorts  of  assistance  may  be  extended  to 
the  visiting  salesman,  because  if  the  orders  taken  are  passed 
through  the  export  house  its  commissions  are  correspondingly 
increased.  But  the  salesman  may  not  wish  to  work  through  the 
same  export  house  in  every  market  he  visits.     He  may  prefer 


274  PRACTICAL  EXPORTING 

to  work  through  one  in  one  market  and  through  a  rival  of  the 
first  in  the  next  market  visited.  A  branch  or  agency  at  one 
point  may  be  important,  but  insignificant  at  another.  One 
local  manager  may  not  be  congenial  to  the  salesman;  a  directly 
competing  line  of  goods  may  be  handled  at  one  branch  but  not 
at  another ;  perhaps  the  salesman  will  work  through  connections 
of  exporters  in  several  fields  but  at  length  reach  one  where  bet- 
ter results  can  be  obtained  by  working  independently.  In  com- 
paratively few  markets  can  the  salesman  work  at  the  same 
time  in  cooperation  with  representatives  of  two  competing  ex- 
port houses.     He  must  almost  always  make  a  choice.^ 

Limitations  of  the  Export  Houses. — It  is  always  to  be  borne 
in  mind,  however,  that  the  manufacturer  who  restricts  his  ef- 
forts to  one  export  house  or  gives  an  agency  for  a  certain  for- 
eign territory  to  a  single  exporter,  whether  or  not  that  exporter 
has  his  own  branch  or  other  organization  in  the  territory  in 
question,  will  be  to  a  certain  extent  handicapped  in  the  devel- 
opment of  trade  in  such  territory.  As  a  rule  an  export  house 
can  sell  the  manufacturer's  goods  only  to  its  own  customers. 
It  cannot  very  well  sell  those  or  any  other  goods  to  merchants 
who  prefer  to  entrust  their  orders  for  supplies  in  general  to 
another  export  commission  house  as  buying  agent. 

This  will  be  the  better  emphasized  if  we  suppose  an  illustra- 
tion. Take  South  Africa  as  the  territory  and  a  certain  brand 
of  corn  shellers  as  the  line.  Suppose  the  implement  manufac- 
turer grants  his  exclusive  agency  for  South  Africa  to  a  certain 
export  commission  house  in  New  York,  whom  we  may  call 
Smith  &  Co.,  which  has  an  office  in  South  Africa  and  possibly 
several  local  traveling  men  visiting  the  important  towns  of  the 
South  African  Union.  The  traveling  man  for  Smith  &  Co.  who 
handles  the  American  manufacturer's  samples  cannot  easily 
induce  a  local   dealer  in   agricultural   implements  to  buy   his 

1  "I  want  to  emphasize  this  point — to  the  manufacturer  who  is  starting 
in  the  field  for  tlie  first  time  the  export  house  gives  an  opportunity  to 
do  business  with  the  least  trouble  and  expense  to  himself.  It  is  up  to 
the  manufafturer,  however,  to  build  up  the  demand  for  his  particular 
product.  If  the  manufacturer,  by  judicious  advertising  and  promotion 
work,  will  open  up  the  market  for  his  goods  he  can  very  readily  rid  himself 
of  the  other  troubles  in  connection  with  the  export  business  l)y  utilizing 
the  s(>rvires  of  the  export  house."  (W.  S.  Kies,  Foreign  Department, 
National  City  Bank  of  New  York.) 


EXPORT  COMMISSION  HOUSES  275 

goods  when  that  dealer  has  for  a  long  time  maintained  friendly 
and  satisfactory  relations  with  Brown  &  Co.,  another  New  York 
export  commission  house  handling  another  kind  of  corn  sheller, 
unless  the  dealer  is  prepared  to  throw  over  his  general  relations 
with  Brown  &  Co.,  his  old  connection.  As  a  rule,  he  will  not 
wish  to  divide  his  orders,  giving  most  of  them  to  Brown  &  Co, 
but  a  little  order  to  the  newcomers,  Smith  &  Co.  His  old 
buyers,  Brown  &  Co.,  have  been  executing  his  orders  for  lines 
that  suit  him,  may  perhaps  have  agencies  of  their  own  which 
compete  more  or  less  favorably  with  the  new  line  offered  by 
Smith  &  Co.  The  chances  are  evidently  much  against  the 
chances  of  Smith  &  Co.,  getting  this  dealer's  "business  for  the 
special  brand  of  corn  sheller  for  which  the  manufacturer  in 
question  has  given  them  his  agency. 

Smith  &  Co.,  the  agents  for  this  new  line,  can,  however,  sell 
their  old  established  customers  to  whom  they  have  previously 
been  selling  other  kinds  of  agricultural  implements,  supplies  in 
general,  or  allied  lines,  which  have  given  them  an  introduction 
to  these  customers.  Here  and  there  Smith  &  Co.  may  pick  up 
new  customers  or  win  away  customers  from  other  export  com- 
mission houses.  In  principle,  however,  the  commission  house 
as  exclusive  agent  for  a  manufacturer  in  a  given  territory  is 
not  likely  to  develop  trade  to  its  greatest  possibilities. 

Some  manufacturers,  however,  believe  it  advantageous  to 
grant  agencies  to  those  commission  houses  which  seem  most  de- 
sirable, each  for  a  special  territory,  allowing  an  agreed  upon 
commission  to  each  house  on  all  orders  received  from  its  terri- 
tory through  no  matter  what  channel. 

Even  in  those  comparatively  rare  cases  where  American  ex- 
porters operate  to  some  extent  as  merchants,  carrying  local 
stocks  of  goods  in  foreign  markets,  specialization  is  coming 
more  and  more  to  govern.  Stocks  may  be  carried  of  factory 
and  mill  supplies,  for  example ;  in  the  same  establishment  stocks 
of  haberdashery  are  not  likely  to  be  found. 

All  this  should  not,  however,  be  taken  to  imply  that  the 
services  of  the  American  export  houses  cannot  be  most  ad- 
vantageously utilized  by  many  manufacturers.  It  is  only  in- 
tended to  urge  that  due  and  intelligent  thought  be  given  to  the 
necessary  discrimination  between  houses  and  between  markets. 


276  PRACTICAL  EXPORTING 


TERMS  OF  BUSINESS  WITH  EXPORT  HOUSES 

Perhaps  most  fruitful  of  all  sources  of  complaint  and  dissat- 
isfaction over  relations  with  export  commission  houses  are  the 
demands  sometimes  made  by  them  which  to  the  inexperienced 
manufacturer  come  as  a  surprise,  a  shock  or  a  puzzle.  How  to 
handle  the  demands  in  question  must  always  be  a  question  of 
individual  policy  on  the  part  of  each  manufacturer  affected. 
He  will  be  guided  usually,  perhaps,  by  a  consideration  of  the 
principle  involved  in  relations  with  these  houses  which  should 
be  quite  fully  understood  from  the  foregoing.  The  demands  in 
question  as  well  as  general  terms  of  doing  business  should  now 
be  considered. 

Are  Purely  Domestic  Risks. — The  New  York  export  commis- 
sion house  is  not  a  foreign  customer.  He  is  a  New  York  cus- 
tomer just  exactly  as  is  any  other  buyer  of  goods  in  that  city. 
Similarly  the  San  Francisco  or  New  Orleans  exporter  is  a 
purely  domestic  customer.  Ratings  of  all  of  them  are  included 
in  the  commercial  agency  books.  No  other  conditions  govern 
the  extension  of  credit  of  these  houses  than  applj^  in  the  case 
of  any  other  customers  in  the  same  cities.  While  there  are  a 
great  many  of  these  export  houses  which  are  large  and  rich, 
there  are  many  others  of  quite  different  description. 

It  is  probably  true  that  the  export  commission  houses  as  a 
class  ought  to  employ  more  capital  in  their  business,  should  be 
stronger  financially.  The  limited  capital  of  some  of  these 
houses  necessitates  selling  their  drafts  on  foreign  customers  the 
very  moment  they  are  able  to  get  possession  of  their  bills  of 
lading.  They  cannot  seek  advantages  in  rates  of  exchange 
which  might  in  the  aggregate  of  a  year's  business  contribute 
materially  to  their  profits.  Indeed,  it  is  too  often  the  case  that 
the  medium  sized  and  the  smaller  export  concerns  simply  send 
their  foreign  bills  of  exchange  to  bankers,  accepting  any  rates 
they  can  obtain  and  making  no  serious  study  at  all  of  scientific 
ways  of  financing,  with  little  comprehension,  apparently,  of 
the  principles  of  foreign  exchange  and  of  possible  advantages 
offered  by  different  ways  of  financing  export  business. 

Risks  Incurred  by  Export  Houses. — The  responsibilities  of 
export  commission  houses   are   thus   explained  by  William   C. 


EXPORT  COMMISSION  HOUSES  277 

Downs,  in  the  Harvard  University  Quarterly  Journal  of  Eco- 
iwmics:  "The  commission  merchant  not  only  expends  and 
locks  up  a  large  sum  of  money  in  the  machinery  for  continuing 
his  business,  but  also,  no  matter  how  good  his  banking  facili- 
ties may  be,  is  obliged  to  tie  up  as  margin  in  banks  an  amount 
of  money  proportionate  to  his  transactions  and  always  has  a 
contingent  liability  for  the  entire  amount  of  his  transactions 
until  they  are  actually  liquidated,  a  period  of  time  averaging 
five  or  six  months.  Hence,  a  commission  merchant  whose  sales 
may  average  $100,000  per  month  is  constantly  carrying  a  lia- 
bility of  $500,000  or  $600,000.  The  fact  that  the  sales  are  to 
various  countries,  to  different  towns,  to  different  customers  in 
each  country  with  different  dates  of  maturity  and  consist  of 
many  different  classes  of  merchandise  so  that  a  general  debacle 
is  practically  impossible,  is  the  only  reason  that  he  is  able  to 
discount  his  bills  with  any  freedom.  An  individual  manufac- 
turer, unless  exporting  on  a  very  large  scale,  could  not  expect 
to  obtain  the  same  banking  facilities." 

Exception  may  be  taken  to  this  statement  in  certain  regards. 
Any  individual  manufacturer  who  possesses  a  satisfactory 
financial  reputation  never  has  any  difficulty  in  discounting  his 
bills  and  usually  at  quite  as  good  rates  as  those  enjoyed  by  the 
average  export  commission  house,  save  only  that  the  latter  may 
have  more  experience  in,  or  better  opportunities  for  "shopping 
around"  among  bankers.  Again,  the  responsibility  of  the  ex- 
port houses  is  by  no  means  so  large  as  that  above  indicated. 
While  it  is  true  that  the  total  gross  liability  of  the  example 
quoted  in  the  course  of  five  or  six  months  may  be  $500,000  or 
$600,000  yet  that  is  not  the  net  liability.  The  exporter  has 
hypothecated  with  the  banks  to  whom  he  has  sold  his  drafts 
merchandise  representing  this  face  value.  In  case  of  forced 
liquidation  the  proceeds  from  such  property  would  account  for 
a  very  large  share  of  the  nominal  liability.  By  no  means  all 
of  the  business  of  export  commission  houses  involves  the  exten- 
sion of  credit  to  their  customers. 

Cash  Discounts. — The  old  notion  of  doing  business  with  ex- 
port commission  houses,  the  consideration  which  seem^ed  to 
commend  relations  with  them  to  manufacturers  not  disposed  to 
look  beyond  the  ends  of  their  own  noses  so  far  as  export  trade 


278  PRACTICAL  EXPORTING 

is  concerned,  used  to  be  that  the  exporters  paid  cash  over  the 
counter;  that  it  was  only  necessary  for  the  manufacturer  to  take 
around  his  bill  of  lading  and  exchange  it  for  a  check.  Even 
to-day  the  advantage  of  the  cash  discount  is  indispensable  to 
any  export  house.  The  exporter  who  does  not  pay  cash  within 
the  usual  cash  period  is  handicapped  in  his  buying,  is  not  likely 
to  secure  the  best  prices,  may  even  be  refused  goods  by  manu- 
facturers. Obviously,  therefore,  considerable  capital  or  ample 
facilities  for  obtaining  funds  are  essential  to  success  in  this 
field.  Many  of  the  export  commission  houses  are,  however,  ac- 
customed on  one  pretense  or  another  to  stretch  cash  terms,  de- 
manding the  ten  day  discount  when  sixty  days  have  passed. 
The  claim  in  many  instances  is  that  goods  have  not  arrived,  or. 
if  they  have  arrived,  that  the  ocean  steamer  has  not  sailed  and  it 
has  not  therefore  been  possible  for  the  exporter  to  sell  his  draft 
and  secure  his  own  cash.  Of  course,  these  arguments  are  rather 
beside  the  point,  having  no  bearing  on  the  principle  underly- 
ing the  very  theory  of  cash  discounts. 

None  the  less,  there  is  some  justification  for  the  complaint  of 
the  export  houses  that  sometimes  they  do  oot  receive  even  as 
favorable  treatment  as  do  some  large  domestic  buyers.  The 
manufacturer  who  is  anxious  to  get  the  business  of  a  big  New 
York  department  store  may  not  only  give  that  establishment 
equally  as  good  prices  as  he  quotes  "for  export,"  but  he  may 
extend  the  facility  of  "sixty  days'  dating"  with  subsequent 
cash  discount,  when  he  positively  refuses  to  consider  anything 
of  the  sort  in  dealing  with  a  New  York  export  house.  Usually, 
however,  exporters  are  placed  at  least  on  an  equality  with  do- 
mestic buyers  so  far  as  prices  are  concerned,  and  sometimes 
special  or  unusual  quotations  are  made  them.  Their  ability  to 
command  exceptional  prices  depends,  or  should  depend,  prin- 
cipally on  the  actual  volume  of  the  trade  offered  or  likely  to 
be  offered  by  the  house  in  question. 

The  demand  of  exporters  that  cash  discounts  be  restricted  to 
them  and  not  extended  to  customers  abroad,  unless  the  latter 
actually  place  cash  in  this  country  before  the  shipment  of  the 
goods,  is  thoroughly  well  justified  and  the  practice  should  be 
adopted  by  every  manufacturer  seeking  export  trade.  Later 
on  we  shall  see  how  other  forms  of  payment  are  by  no  means 


EXPORT  COMMISSION  HOUSES  279 

to  be  considered  as  cash.  Manufacturers  will  conserve  their 
own  security  no  less  than  interest  by  refraining  from  quoting 
cash  discounts  abroad,  while  this  advantage  to  the  exporter  is 
little  enough  for  the  manufacturers  to  offer. 

Extra  "Private"  Concessions. — No  matter  what  claims  may 
be  made  in  this  regard  by  export  houses,  it  remains  a  fact  that 
few  if  any  among  them  do  not  now  and  then  request  or  demand 
extra  discounts,  private  commissions,  or  concessions  of  similar 
nature  under  some  other  name,  from  manufacturers. with  whom 
they  do  business.  In  but  few  cases  are  these  requests  justified, 
for  seldom  are  special  services  actually  rendered.  Requests 
sometimes  develop  into  demands  and,  in  all  too  many  cases, 
demands  grow  into  threats.  This  is  doubtless  the  greatest 
abuse  in  the  export  commission  business.  It  is  one  against 
which  the  heads  of  reputable  export  houses  have  themselves 
protested,  but  while  the  head  of  such  a  house  has  been  protest- 
ing, one  of  his  employees,  who  wants  to  make  a  record  for 
shrewdness  for  himself,  has  at  the  same  time  been  adopting  the 
very  course  denounced  by  his  principal.  It  happens  often 
enough  that  demands  of  this  sort  are  made  even  when  the  busi- 
ness in  view  by  a  commission  house  has  been  originated  by  a 
manufacturer  of  w^hom  the  commission  house  never  before 
heard. 

Of  course,  when  a  manufacturer  thoroughl}'  understands  the 
business  of  these  houses  and  h,as  established  intimate  relations 
with  certain  of  them,  the  question  of  policy  involved  on  his 
part  in  complying  with  requests  or  demands  for  private  con- 
cessions may  be  quite  another  story. 

Legal  Status  of  Commission  Houses. — Here  is  the  position  of 
English  authorities  as  to  the  seeking  and  retention  of  "pri- 
vate" allowances  by  export  houses:  "It  should  be  borne  in 
mind  that  when  a  person  is  acting  as  agent  he  is  bound  to  ac- 
count to  his  principal  for  all  discounts  or  other  allowances  that 
he  may  receive.  His  remuneration  should  consist  solely  and 
entirely  of  the  commission  which  he  receives  on  the  transaction. 
A  merchant  on  the  other  hand,  if  acting  as  such  and  not  merely 
as  an  agent,  is  entitled  to  retain  any  discounts  or  allowances 
received  respecting  the  goods ;  but  when  he  pa^'S  shipping  or 
other  charges  for  account  of  bis  customer  and  specifies  such 


280  PRACTICAL  EXPORTING 

charges  on  the  invoice,  he  is  in  that  respect  acting  as  agent  and 
should  allow  any  rebates  or  allowances  which  he  may  receive  of 
such  charges." 

The  English  courts  have  pronounced  definitely  as  to  the 
profits  which  an  export  commission  merchant  may  properly 
make.  In  a  case  a  few  years  ago  where  a  plaintiff  claimed  that 
the  defendant  besides  charging  commission  of  so  much  per  cent, 
made  profit  in  other  directions,  for  instance,  on  the  charge  for 
packing  and  in  not  allowing  discounts  granted  by  manufac- 
turers, also  on  the  length  of  time  granted  for  payment  by  cer- 
tain manufacturers,  the  Court  found  that  this  way  of  securing 
compensation  for  alleged  loss  in  other  directions  was  entirely 
irregular  and  calculated  to  deceive  the  clients,  who  should  have 
been  charged  with  all  the  losses  and  credited  with  all  the  gains, 
the  only  profit  accruing  to  the  commission  merchants,  that  is 
the  defendants,  being  the  commission  they  openly  charged  in 
their  invoice. 

The  Court  went  on  to  declare  that  the  moment  a  commission 
is  charged  the  merchant  figures  no  longer  as  an  ordinary  buyer 
or  seller  but  rather  as  an  agent,  seeing  tliYit  he  is  paid  a  stipu- 
lated amount  for  acting  on  behalf  of  another  person,  whether 
buying  or  selling,  so  that  the  merchant  becomes  .for  the  time 
being  simply  the  agent  of  his  client. 

"Contributions"  Toward  Expenses. — AA^hat  is  only  to  be 
called  another  abuse  in  the  export  commission  business  is  the 
frequent  solicitation  from  manufacturers  of  contributions  to- 
ward expenses  which  it  is  proposed  to  undertake  nominally  in 
behalf  of  the  development  of  the  manufacturer's  foreign  trade. 
Suggestions  for  such  contributions  are  usually  based  on  a  pro- 
posal to  have  a  traveling  man  for  the  export  house  carry  a  line 
of  the  manufact.irer's  samples  and  actively  endeavor  to  solicit 
orders  for  him,  which,  of  course,  will  be  filled  through  the 
commission  house.  Sometimes,  however,  these  suggestions  are 
based  on  nothing  more  than  indefinite  proposals  to  give  special 
attention  to  the  manufacturer's  line,  or  to  handle  it  exclusively. 

The  ])osition  of  traveling  salesmen  for  export  commission 
houses  has  already  been  examined.  Their  ability  to  get  busi- 
ness for  any  special  line  which  they  carry  depends  largely  on 
the  general   class  of  trade  which  will  be  chiefly  drummed.     If 


EXPORT  COMMISSION  HOUSES  28 J 

a  large  general  assortment  of  samples  of  all  sorts  of  goods  is 
carried  then  the  traveling  man  seldom  has  time  enough  in  any 
one  market  to  work  thoroughly  every  branch  of  trade  and, 
since  he  must  strive  to  his  utmost  to  make  the  largest  total  sales 
in  order  to  justify  his  salary,  expenses  and  continued  employ- 
ment, it  is  bound  to  result  that  he  will  follow  the  lines  of  least 
resistance  and  devote  his  efforts  to  selling  the  goods  that  sell 
most  easily  and  quickly. 

Something  may  be  done  by  the  manufacturer  through  per- 
sonal work  with  the  salesman,  giving  him  a  more  or  less  ade- 
quate knowledge  of  the  special  line  and  endeavoring  to  develop 
his  enthusiasm  for  it,  but  any  such  personal  interest  that  may 
be  worked  up  in  the  salesman  will  rapidly  evaporate  when  he  is 
in  the  field,  if  the  line  is  not  a  popular  one  or  one  already  known 
and  introduced,  that  is  if  a  great  deal  of  hard  work  is  required 
to  introduce  it.  None  the  less,  cases  have  been  known  where 
cooperation  of  this  sort  has  been  found  profitable  by  manufac- 
turers who  have  not  regretted  contributions  made  to  commis- 
sion houses  in  support  of  similar  efforts  by  their  traveling  men. 

Not  every  such  suggestion  for  contribution  from  manufac- 
turers is  justified  or  can  even  be  called  honest.  Each  sugges- 
tion of  this  sort  should  be  carefully  scrutinized  and  analyzed. 
New  York  exporters  have  been  known  to  appeal  for  such  con- 
tributions, claiming  five  or  six  traveling  men  continually  work- 
ing in  certain  markets,  when  manufacturers  of  lines  apparently 
well  suited  for  export  have  solicited  orders.  Some  such  ex- 
porters have  never  had  more  than  two  traveling  men  and 
usually  have  one  only.  When  five  sets  of  samples  have  been 
furnished,  four  of  them  have  remained  in  the  exporter's  New 
York  office.  This  sort  of  contribution  is  little  less  than  black- 
mail. If  paid  at  all  by  the  manufacturer  it  should  be  with  a 
full  understanding  of  the  real  state  of  affairs. 

Another  New  York  exporter,  Avho  is  reputed  to  do  quite  a 
large  business  in  Latin  America,  is  reliably  reported  as  carry- 
ing samples  of  certain  American  goods  which  he  takes  care  shall 
not  bear  any  distinguishing  brands — above  all,  no  registered 
trade  marks.  Orders  secured  by  traveling  men  in  the  hosiery 
line,  for  example — are  filled  by  shipping  goods  from  any  manu- 
facturer whatsoever  who  can  be  found  to  make  a  near  imitation 


282  PRACTICAL  EXPORTING 

of  the  original  sample.  No  little  dissatisfaction  has  resulted 
from  this  course  on  the  part  of  all  concerned,  save  the  exporter, 
and  no  little  real  harm  followed  to  American  export  interests  in 
general. 

Once  more,  however,  the  reader  should  be  cautioned.  He 
must  not  get  the  idea  that  every  export  commission  house  is 
dishonest  or  misrepresents  facts  and  conditions.  Many  of 
them  are  big,  rich,  honorable  concerns.  Ordinary  business 
shrewdness  only  is  required  in  operating  through  exporters  as 
a  class. 

Future  of  the  Export  Commission  House. — In  spite  of  the 
many  criticisms  aimed  at  export  commission  houses  and  the 
world-wide  inclination  to  do  away  with  the  middleman  so  far  as 
possible,  there  is  no  real  reason  to  expect  their  elimination. 
They  are  and  will  always  continue  to  be  immenseh^  useful  in  the 
exporting  of  a  great  many  kinds  of  American  products  and  in 
our  trade  with  many  foreign  markets.  The  character  of  their 
business  has  changed  materially  within  recent  years  and  will 
undoubtedly  change  to  an  even  greater  extent  in  the  future. 
Closer  acquaintance  between  manufacturers  and  commission 
houses,  franker  relations,  perhaps  more  honest  representations, 
are  to  be  desired,  will  probably  come. 

In  the  discussion  of  the  need  of  ' '  combinations  of  small  manu- 
facturers" for  the  development  of  export  trade,  speakers  and 
writers  seem  entirely  to  have  forgotten  the  very  existence  of  the 
export  commission  houses.  They  seem  to  overlook  the  fact  that 
the  combinations  proposed  will  themselves  virtually  be  of  the 
same  nature  and  on  the  same  basis  as  the  existing  export  houses 
— with,  however,  this  important  distinction :  the  established 
houses  already  enjoy  a  knowledge  and  experience  in  export 
trading  which  proposed  new  "combinations"  would  have  to 
acquire. 

It  is  probable,  too,  that  the  day  of  the  real  export  "mer- 
chant" will  arrive  here  in  the  United  States,  especially  in  view 
of  the  growing  difficulties  in  the  export  commission  business  and 
the  narrowing  profits  of  all  American  business.  It  is  probable 
that  through  such  merchants  the  "credit"  can  best  be  extended 
which  it  is  declared  foreign  markets  must  have  from  the  United 
States  if  we  are  to  supplant  competing  nationalities  in  a  larger 


EXPORT  COMMISSION  HOUSES  283 

proportion  of  their  trade.  Possibly  the  greatest  opportunity 
in  this  direction  may  be  in  a  big  aggregation  of  capital  which 
shall  interest  itself  in  the  development  of  our  export  trade  in 
cotton  piece-goods — even,  if  necessary,  in  the  physical  reorgani- 
zation of  mills  to  be  devoted  exclusively  to  export  goods.  In  a 
preliminary  and  more  general  w&y,  however,  the  cooperation 
spoken  of  between  manufacturer  and  exporter  is  to  be  com- 
mended and  will  almost  certainly  result  in  increased  profits 
and  satisfaction  to  both. 


CHAPTER  IX 

LOCAL  FOREIGN  SALES  AGENTS,  DISTRIBUTORS 
AND  BRANCH  OFFICES 

Local  Sales  Agents  Established  Everywhere — Used  More  Gener- 
ally by  European  Tha7i  by  American  Manufacturers— Are 
Not  Buyers  of  Goods  and  Hence  to  be  Distinguished  from 
Wholesale  Distributors — Their  Functions  as  Salesmen  and 
Otherwise — Giving  Agencies  to  Merchants,  Advantages  and 
Disadvantages — When  and  How  Manufacturers  Should  Estab- 
lish Their  Own  Branch  Offices  Abroad. 

MISUSE  of  the  word  ''agent"  is  much  too  common 
among  American  manufacturers.  They  often  adver- 
tise "agents  wanted"  when  what  they  really  mean  is 
that  they  want  to  find  merchants  who  will  give  them  orders  in 
return  for  which  the  exclusive  control  of  their  goods  for  a  cer- 
tain market  will  be  granted.  There  is  entirely  too  much  confu- 
sion of  this  term  everywhere,  even  in  Europe.  A  merchant  may 
be  an  agent  in  a  sense,  but  even  so  it  is  highly  desirable  to  dis- 
tinguish in  the  use  of  the  word. 

"What  we  want  is  orders"  is  beyond  any  question  a  praise- 
worthy slogan.  However,  manufacturers  do  not  always  give 
sufficient  thought  and  study  to  different  ways  of  getting  orders 
or  deliberately  analj-ze  ways,  seeking  that  by  which  the  most 
orders  are  likely  to  be  obtained.  As  has  already  been  suggested, 
one  order  from  a  market  should  only  be  regarded  as  a  clue  to 
many  others.  It  follows  that  ways  of  getting  the  most  possible 
business  in  that  special  market  need  study.  We  have  now  to 
consider,  as  regards  any  given  market,  the  local  commission 
agent  domiciled  there,  the  wholesale  distributor  and  the  manu- 
facturer's own  branch  establishment. 

LOCAL  COMMISSION  AGENTS 

Every  foreign  mail  brings  to  prominent  American  mnufac- 
turers  letters  from  sundry  foreign  countries  applying  in  more  or 

284 


AGENTS  AND  BRANCH  OFFICES  285 

less  convincing  terms  for  the  agency  for  the  manufacturer's  goods 
in  a  given  district.  These  letters  are  often  enough  dropped  un- 
answered into  the  waste  paper  basket,  or  the  manufacturer  re- 
plies quoting  prices  and  soliciting  an  order.  People  who  ask  for 
such  agencies  are  not  merchants.  They  are  not  buyers  of  goods. 
They  are  salesmen.  It  is  an  evidence  of  American  ignorance  of 
the  organization  of  foreign  business  to  offer  to  sell  them  goods. 
Such  a  proposition  will  be  as  great  a  surprise  to  the  foreign  agent 
as  it  would  be  to  an  American  "drummer"  who  makes  applica- 
tion iov  employment  to  be  met  with  a  proposal  that  he  place  an 
order  and  pay  for  goods  which  he  seeks  a  "job"  to  sell. 

It  is  certainly  a  mistake  also  to  disregard  all  such  applica- 
tions or  to  depreciate  the  value  of  the  principle  involved  in  this 
way  of  developing  business.  The  very  fact  of  the  existence 
everywhere,  and  in  large  numbers,  of  these  local  commission 
agents  can  only  indicate  that  they  are  believed  by  some  manu- 
facturers to  till  a  useful  purpose.  Thus,  we  find  an  English  au- 
thority saying:  "In  foreign  trade  a  network  of  good  agents 
is  practically  indispensable  to  success."  We  should  then  ex- 
amine rather  carefully  the  operations  of  such  agents  and  possible 
advantages  in  utilizing  their  services. 

Where  Agents  Abound. — These  local  commission  agents  are 
to  be  found  in  every  country  under  the  sun,  even  in  the  special- 
ized markets  of  Europe,  and  there  are  a  good  many  of  them  still 
existing  here  in  the  United  States,  for  example  representing 
Eastern  mannfacturers  in  the  Pacific  Coast  cities,  and  in  the 
City  of  New  York  as  representatives  of  European  goods  imported 
here.  In  Germany  such  agents  had  a  large  and  important  asso- 
ciation of  their  own  with  prescribed  and  printed  forms  of  con- 
tract including  provisions  for  the  settlement  by  arbitration  of 
disputes  between  manufacturer  and  agent. 

Agents  of  this  sort  are  used  generally  by  European  manufac- 
turers or  at  least  much  more  freely  than  (hitherto)  by  Americans. 
Yet  practically  every  export  commission  house  in  this  country  is 
represented  in  some,  perhaps  in  many,  foreign  markets  by  such 
agents  and  the  custom  of  utilizing  them  has  been  growing  among 
American  manufacturers  of  late  years,  as  their  experience  in 
foreign  markets  has  increased.  It  may  be  noted  that  there  are 
some  agents  of  this  class  domiciled  in  foreign  markets  who  are 


286  PRACTICAL  EXPORTING 

Americans,  notably  in  Australia.  Such  agents,  although  one  of 
them  usually  represents  many  different  manufacturers  in  perhaps 
as  many  diverse  kinds  of  goods,  are  not  to  be  confounded  with 
the  "combination"  traveling  men  who  have  already  been  con- 
sidered. The  local  agent  permanently  domiciled  in  a  definite, 
circumscribed  territory  must  be  regarded  as  in  a  different  class. 

Prejudice  Against  Agents. — American  manufacturers,  famil- 
iar only  with  our  highly  specialized  trade  at  home,  seem  always 
disposed  to  doubt  the  ability  of  any  salesman  to  handle  satisfac- 
torily at  the  same  time  ribbons  and  machinery  even  in  a  small 
market,  for  example,  in  the  West  Indies  or  in  Venezuela.  But 
any  live,  active  man  in  such  a  market  is  bound  to  know  personally 
every  individual  engaged  in  any  sort  of  business. 

The  evolution  of  the  activities  of  such  an  agent  is  sometimes 
quite  clearly  to  be  traced.  For  instance,  take  an  agent  in  Cuba 
who  begins  by  developing  quite  a  large  business  in  strawboard. 
Among  other  customers  he  acquires  manj^  of  the  numerous  manu- 
facturers of  matches  and  soap  in  Cuba  who  require  material  for 
making  their  cardboard  boxes.  At  the  same  time  these  manu- 
facturers, whose  friendship  and  confidence  he  has  developed, 
require  chemicals,  rosin,  greases,  paper,  printing  and  paper-box- 
making  machinery,  wood-working  machinery,  belting,  lubricants, 
etc.  There  is  probably  not  enough  demand  for  machinery,  for 
example,  to  make  the  exclusive  representation  of  a  given  kind  of 
machinery  worth  the  sole  attention  of  a  capable  agent.  If  there 
is  not  business  enough  to  be  done  in  any  single  article  to  make  it 
alone  profitable  for  a  local  representative,  there  certainly  cannot 
be  enough  to  warrant  the  American  manufacturer  in  maintaining 
his  own  special  agent  in  such  a  market. 

Then,  too,  American  manufacturers  seem  to  be  afraid  to  entrust 
what  they  call  the  making  of  credits,  or  "the  control  of  their 
business,"  to  a  foreign  agent,  quite  forgetting  that  such  an 
agent  must  in  any  event  be  required  to  operate  under  their  in- 
structions and  subject  to  their  dictation,  with  such  limitations 
as  they  may  choose  to  put  upon  him. 

Nationality  of  Agents. — There  is  a  great  deal  of  nonsense  in 
the  popular  cry  that  we  must  have  Americans  to  represent  Amer- 
ican goods  in  foreign  markets.  No  similar  argument  based  on 
national   patriotism   has   anything   like   the   popularity   among 


AGENTS  AND  BRANCH  OFFICES  287 

European  manufacturers  tlian  this  has  acquired  in  our  own 
country.  Tlie  experienced  man  in  a  given  market  may  be,  al- 
most certainly  will  be,  preferable  to  a  newcomer.  Costly  experi- 
ments are  sure  to  be  avoided.  On  the  other  hand,  it  does  not 
follow  that  a  native  of  the  market  is  to  be  preferred.  Very 
likely  an  agent  of  foreign  birth  may  be  more  useful  in  introduc- 
ing any  kind  of  goods  of  foreign  origin.  Germans  in  South 
America  used  to  act  as  selling  agents  on  commission  for  British 
manufacturers.  Prior  to  the  European  War,  English  commis- 
sion agents  represented  German  exporters  in  South  Africa  while 
some  Germans  represented  English  houses  there. 

Many  years  ago  an  American  shoe  manufacturer  visiting  Lon- 
don and  succeeding  in  securing  trial  orders  for  his  products, 
wished  to  leave  a  permanent  representative  behind  him  when  he 
returned  home.  On  looking  the  field  over  he  determined  on  an 
agent  of  Austrian  birth  who  had  for  a  long  time  been  domiciled 
in  London  representing  certain  prominent  Vienna  shoe  manufac- 
turers. The  American  manufacturer  had  no  hesitation  in  plac- 
ing his  samples  and  the  development  of  his  business  in  the  hands 
of  this  Austrian,  for  the  American  goods  did  not  compete  with 
the  Austrian  represented  by  the  same  man,  even  though  at  similar 
prices.  The  American  never  had  reason  to  repent  of  his  decision, 
for  the  agent  had  not  established  himself  in  London  to  represent 
the  Austrian  nation  and  he  had  an  equal  interest  in  selling  the 
American  goods  as  in  selling  the  Austrian  goods,  because  it  was 
his  ambition  to  make  just  as  much  money  as  he  possibly  could. 

Local  Status  of  Agents. — \\\  every  market  where  agents  are 
to  be  found,  and  that  means  all  markets  of  the  world,  there  are 
all  sorts — good,  bad  and  indifferent.  There  are  agents  of  stand- 
ing, successful  experience,  high  character,  commanding  general 
respect;  there  are  boys  just  out  of  school  who  do  not  know  what 
else  to  do  than  set  themselves  up  as  commission  agents ;  there  are 
agents  who  are  struggling  along  making  a  pitiful  livelihood  at 
almost  anything  to  which  they  can  turn  their  hands;  there  are 
agents  who  represent  some  of  the  biggest  manufacturers  of  the 
world  from  whom  they  virtually  have  carte  blanche  in  their 
territories.  It  is  not  to  be  forgotten  that  in  foreign  markets 
people  look  much  more  to  the  status  of  the  man  on  the  spot  than 
to  the  house  he  represents.     In  this  respect,  at  least,  the  local 


288  PRACTICAL  EXPORTING 

commission  agent  is  comparable  to  a  manufacturer's  own  travel- 
ing salesman. 

The  manufacturer  of  goods  occasionally  suitable  for  supplies 
to  government  and  public  service  enterprises  will  do  well  to 
remember  that  offers  in  response  to  official  invitations  to  tender 
are  usually  only  accepted  from  people  on  the  ground  who  give 
satisfactory  references  including  local  banks,  demonstrating  their 
ability  and  the  ability  of  the  house  they  represent  to  carry  out  a 
contract  if  it  is  awarded  to  them.  Local  agents  have  other  facil- 
ities in  this  direction  quite  impossible  to  a  foreign  manufacturer. 
In  many  countries  Governments  maintain  a  "list"  of  the  local 
concerns  in  a  position  to  otter  certain  supplies  and  "  getting  on 
the  list"  involves  receiving  particulars  of  goods  required  with 
invitation  to  submit  bids  in  numerous  instances  when  tenders  are 
never  publicly  advertised. 

A  Resident  Agent's  Responsibility. — In  foreign  countries  an 
agent  is  commonly  accepted  as  the  authorized  representative  of 
his  principals  in  every  respect.  However,  the  authority  of  the 
agent  may  be  limited  by  the  contract  which  his  principal  makes 
with  him.  Frequently,  if  not  usually,  it  is  assumed  that  the 
agent  who  sells  goods  is  authorized  to  collect  the  invoice  value  of 
those  goods,  unless  such  responsibility  is  expressly  disclaimed  on 
the  face  of  the  invoice. 

In  England,  the  agent  for  an  American  manufacturer  has  been 
held  personally  responsible  for  claims  for  damages  against  that 
manufacturer  on  the  part  of  customers  to  whom  goods  have  been 
sold  and  who  have  found  cause  for  claim. 

In  Italy,  the  law  provides  that  if  an  agent  has  been  permitted 
to  collect  a  single  account  he  is  regarded  as  empowered  to  collect 
other  accounts.  While  risk  involved  in  such  collections  api)lies 
only  in  the  case  of  open  accounts,  which  are  seldom  advisable 
and  on  the  whole  uncommon  in  American  export  practice,  yet 
whore  it  is  desired  to  guard  against  such  a  contingency  invoices 
may  be  stamped,  preferably  in  the  language  of  the  country  to 
which  the  goods  have  been  shipped,  with  a  notice  that  settlements 
will  not  be  recognized  by  the  manufacturers  unless  mad^.^  direct 
to  them,  or  in  some  other  special  manner,  "as  our  representatives 
are  not  authorized  to  make  collections." 

It  is,  however,  quite  common  practice  that  when  a  desirable 


AGENTS  AND  BRANCH  OFFICES  289 

agent  has  been  appointed  a  duly  executed  power  of  attorney  is 
given  him  enabling  him  as  the  manufacturer's  representative  to 
do  certain  specific  acts.  The  agent's  principals  are  thereby 
legally  absolved  from  responsibility  for  any  acts  of  his  transcend- 
ing the  authority  specifically  given.  A  certain  implied  responsi- 
bility may  remain,  however,  of  which  considerations  of  business 
policy  may  impel  recognition. 

It  should  be  understood  that  an  agent  is  not  as  a  rule,  or  unless 
by  special  agreement,  responsible  for  goods  sold  by  him  if  his 
customers  fail  before  the  goods  have  been  paid  for.  The  agent 
does  not  sell  his  own  goods  or  act  on  his  own  account.  He  is 
purely  an  agent  for  his  principals. 

The  financial  resources  of  agents  of  this  sort  are  likely  to  be 
limited,  no  matter  how  good  an  income  one  who  is  successful  may 
be  making.  His  own  resources  are  not  usually  a  matter  of  im- 
portance to  manufacturers  whom  he  represents,  for  they  seldom 
have  occasion  to  trust  him  or  extend  credit  to  him,  at  least  for 
anj'thing  more  than  the  usually  small  value  of  sample  collec- 
tions. In  such  a  case,  or  in  any  likely  case,  the  financial  responsi- 
bility of  the  agent  is  quite  subordinate  to  his  moral  responsibility. 

Choosing  a  Local  Agent. — It  is  extremely  desirable  that  when- 
ever possible  agents  be  personally  selected  after  meeting  and 
watching  them  at  work  in  the  fields  where  they  are  located. 
Whenever  a  foreign  market  is  visited  by  a  manufacturer,  or  by 
his  salesman,  such  a  personal  selection  on  the  ground  can  be 
made.  American  traveling  salesmen  should  be  specifically  em- 
powered by  manufacturers  to  appoint  permanent  representatives 
in  the  principal  trade  centers  who  can  follow  up  the  introductory 
work,  keep  in  touch  with  the  local  trade  and  see  that  repeat  orders 
are  forthcoming. 

When  one  cannot  choose  an  agent  in  the  course  of  an  actual 
visit  to  his  market,  it  still  remains  possible  to  obtain  otherwise 
a  fairly  satisfactory  idea  of  the  agent's  character  and  standing 
and  ability.  In  view  of  the  responsibilities  involved  on  both 
sides,  as  well  as  the  damage  or  benefit  to  business  likely  to  result, 
exceptional  care  must  be  taken  in  the  examination  of  an  agent's 
claims  before  his  appointment.  The  bad  must  strenuously  be 
avoided.  The  character  of  the  agent  comes  first,  his  ability 
second. 


290  PRACTICAL  EXPORTING 

An  Agent's  References. — An  applicant  for  appointment  as 
agent  will,  of  course,  be  expected  to  set  forth  his  own  record 
frankly  and  give  addresses  of  many  references.  References  to 
American  manufacturers  who  have  already  been  represented  for 
a  sutificieut  length  of  time  to  make  their  experience  and  opinion 
worth  considering  are  easily  investigated  and  are  probably  those 
most  satisfactory  to  our  manufacturers,  as  a  rule.  However,  be- 
cause this  way  of  doing  business  is,  as  yet,  comparatively  rare  in 
this  country,  there  are  not  many  even  of  the  best  foreign  com- 
mission agents  who  are  able  to  give  references  to  American  con- 
cerns. References  to  European  manufacturers  are  much  com- 
moner. Sometimes  such  manufacturers  of  international  fame 
are  mentioned.  Sometimes  the  manufacturers  named  are  quite 
unknown  in  the  United  States.  In  the  one  case,  confidence  will 
be  felt  in  information  given  by  the  large  concerns  in  reply  to 
letters  of  inquiry ;  in  the  other,  little  eonfidenee  reposed  because 
the  manufacturers  are  just  as  unknown  as  is  the  agent  who  men- 
tions them  as  his  references.  None  the  less,  information  from 
all  should  be  sought,  but  the  investigation  should  not  stop  there. 
It  is  characteristic  of  all  references  that  names  only  will  be 
quoted  which  it  is  believed  will  result  in  satisfactory  reports. 
There  may  be  numerous  other  concerns  with  whom  relations 
have  been  maintained  which  might  not  be  inclined  to  recom- 
mend the  agent  so  highly.  An  effort  should  be  made  to  find 
what  other  firms  than  those  named  as  references  have  also  been 
represented,  and  information  received  from  such  concerns  may 
be  compared  with  that  from  the  applicant's  references. 

Some  of  these  agents,  particularly  in  Latin  America,  are  fond 
of  mentioning  local  business  houses  as  references.  For  a  nura- 
l)or  of  reasons  the  latter  class  is  worthy  of  no  consideration  at 
all.  However,  local  bankers  in  the  agent's  own  town  may  be 
asked  in  regard  to  the  applicant's  character  and  local  trade  in- 
fluence. As  a  rule  their  advices  in  such  regards  are  trust- 
worthy. Other  information  independently  undertaken  by  the 
manufacturer  will  follow  the  procedure  usual  in  the  case  of  any 
credit  reports. 

Why  No  References  May  Be  Named. — IMany  of  the  hundreds 
of  applications  for  agencies  which  reach  American  manufacturers 
do  not  mention  any  references  w'hatever.     This  omission  is  apt 


AGENTS  AND  BRANCH  OFFICES  291 

to  make  an  unpleasant  impression  on  the  manufacturer,  which 
may  or  may  not  be  justified.  Even  the  best  of  foreign  agents 
are  sometimes  unwilling  to  subject  their  principals  unnecessarily 
to  the  annoyance  and  a  certain  implied  responsibility  in  acting 
as  references  and  hence  defer  mentioning  any  names  until  they 
have  been  encouraged  by  the  manufacturers  to  whom  they  applj' 
to  believe  that  if  they  can  justify  their  claims  they  will  be  con- 
sidered for  the  position  they  seek.  On  the  other  hand,  a  good 
many  of  these  applications  for  agencies  come  from  people  not  in 
a  position  to  quote  imposing  references.  The  manufacturer 
ought  not  to  assume  that  one  or  the  other  of  these  conditions  is 
the  fact  in  any  given  instance. 

No  harm  at  all  is  done  by  replying  to  every  such  application, 
observing  in  such  repl}'  that,  of  course,  no  real  consideration  can 
be  given  to  the  application  until  references  have  been  quoted 
and  duly  investigated.  Advantage  should  be  taken  of  the  ad- 
vertising opportunity  secured  from  the  applicant's  expressed  in- 
terest in  the  goods.  There  is  nothing  to  be  lost  by  impressing 
one's  correspondent  with  the  special  desirability'  of  the  goods 
one  has  to  sell,  whether  or  not  it  is  expected  in  any  case  to  estab- 
lish business  connections  along  the  lines  proposed.  This  matter 
should,  however,  be  handled  intelligently.  Nothing  is  to  be 
gained  by  offering  to  sell  goods  to  an  agent  of  this  description. 
He  will  be  apt  to  curl  his  lip  in  scorn  at  the  manufacturer's 
ignorance,  or  as  he  may  call  it,  provincialism. 

No  agent  must  ever  be  appointed  until  the  manufacturer  is 
absolutely  convinced  from  all  that  he  can  learn  from  every 
available  source  that  the  agent  is  deserving  of  confidence. 
When  appointed,  that  confidence  and  every  possible  support 
should  freely  be  extended. 

Contracts  with  Agents. — In  every  case,  in  appointing  an 
agent  a  hard  and  fast  contract  should  be  made,  clearly  and  mi- 
nutely explaining  and  specifying  the  powers  and  duties  of  the 
agent,  his  authority  and  how  limited,  the  terms  on  which  he  is 
empowered  to  do  business  as  representing  his  principals  and 
placing  equal  emphasis  on  the  responsibilities  and  liabilities  of 
the  principals  themselves. 

Among  other  things,  such  contracts  should  particularly 
specify :  the  territory  in  which  the  agent  is  to  operate ;  the  dura- 


292  PRACTICAL  EXPORTING 

tion  of  the  contract ;  the  rate  of  commission  ajid  whether  apply- 
ing only  to  new  business  or  to  business  already  established  and 
all  business  from  the  territory ;  when  settlements  of  commissions 
due  and  payable  are  to  be  made,  and  how.  The  contract  may 
very  well  also  include  a  provision  that  all  invoices  are  to  be  made 
out  in  the  names  of  buyers  but  that  copies  shall  be  placed  in 
the  agent's  hands  for  his  information  and  to  enable  him  to  pro- 
tect his  principal's  interests  in  case  of  need. 

Such  contracts  should  be  officially  executed  and  attested. 
The  manufacturer  will  do  well  to  have  his  signature  witnessed 
by  the  nearest  resident  consul  in  the  United  States  of  the  coun- 
try in  which  the  agent  is  located.  The  agent  on  his  side  should 
be  expected  to  execute  his  copy  of  the  contract  before  the  nearest 
American  consul  and  the  whole  should,  whenever  possible,  be 
duly  registered  in  the  competent  local  foreign  commercial 
courts,  or  with  other  suitable  authorities. 

Care  should  be  taken  to  avoid  "jokers"  in  these  contracts. 
Many  a  contract  has  been  made  which  turned  out  to  involve  the 
manufacturer  in  responsibility  to  pay  commissions  for  a  long 
term  of  years  on  business  no  matter  how  derived  from  territory 
in  question,  or  whether  the  agent  ever  lifted  a  finger  to  try  to  de- 
velop any  business.  Contracts  sometimes  include  a  provision 
for  cancellation  prior  to  their  set  term,  either  automatically  or 
on  due  notice,  if  a  certain  minimum  volume  of  business  has  not 
been  secured  by  the  agent.  Liberal  arrangements  in  this  regard 
are  called  for,  since  the  most  honest  and  most  able  of  agents  may 
not  be  able  to  sell  new,  unknown,  untried  goods  in  a  foreign  mar- 
ket up  to  the  expectations  of  their  enthusiastic  American  manu- 
facturer. 

Assignment  of  Territory. — The  territory  itself  should  be  as- 
signed with  due  judgment  and  discretion.  Contracts  have  been 
known  to  include  Manila  and  Panama  in  an  agent's  territory, 
apparently  because  a  manufacturer  fancied  that  both  were 
United  States  territory.  Some  manufacturers  have  been  forced 
to  refer  inquiries  from  Iquitos,  Peru,  to  an  agent  in  Lima,  be- 
cause an  agency  contract  has  been  made  to  cover  Peru  as  a 
whole.  But  Iquitos  is  on  the  Amazon  River,  unapproachable 
from  Lima  without  a  sea  voyage  of  several  weeks'  duration 
around  the  larger  part  of  the  South  American  continent;  there 


AGENTS  AND  BRANCH  OFFICES  293 

is  no  commercial  communication  between  Lima  and  Iquitos. 
Rio  de  Janeiro  and  the  Amazon  District  of  Brazil  are  as  dis- 
tant one  from  the  other,  so  far  as  accessibility  is  concerned,  as 
are  New  York  and  San  Francisco. 

Few  of  these  foreign  commission  agents  do  very  much  travel- 
ing. Territory,  as  a  rule,  should  therefore  be  limited.  Here, 
however,  as  always,  conditions  must  govern.  An  agent  in  San 
Juan,  Porto  Rico,  may  be  expected  to  cover  the  whole  island. 
In  any  case,  it  will  almost  always  be  desirable,  as  will  invariably 
be  demanded  by  the  agent,  that  the  agency  be  exclusive  and  the 
manufacturer  should  not  only  guarantee  the  territory  in  name 
but  should  absolutely  protect  the  agent.  As  one  manufacturer 
who  does  a  large  business  in  this  way  expresses  it:  "If  you 
have  to  hand  them  a  check  for  $200  on  a  silver  platter,  do  it 
with  a  smile.     You  will  be  repaid." 

Rates  of  Commission. — The  rate  of  commission  demanded  by 
local  commission  agents  naturally  varies  according  to  the  line  of 
goods  involved  and  local  conditions.  It  may  be  as  low  as  1  per 
cent,  on  some  staples  and  as  high  as  20  per  cent,  on  some 
specialties.  This  usually  lies  within  the  discretion  of  the  manu- 
facturer himself. 

An  agent's  proposal  to  increase  prices  in  order  that  the  manu- 
facturer may  be  able  to  pay  a  larger  commission  is  usually  open 
to  the  criticism  that  sales  may  thereby  be  restricted.  However, 
sometimes  an  arrangement  is  made  that  an  agent  is  to  receive 
the  manufacturer's  proposed  rate  of  commission  on  all  sales 
made  at  manufacturer's  established  prices,  but  that  when  in- 
creased prices  are  secured  by  the  agent  on  terms  satisfactory  to 
the  manufacturer  then  a  division  between  manufacturer  and 
agent  shall  be  made  of  the  actual  increase  in  price  secured.  This 
may  or  may  not  work  out  satisfactorily,  chiefly  depending  per- 
haps on  the  character  and  judgment  of  the  agent.  Ordinarily, 
settlements  for  commissions  on  sales  are  made  every  three 
months  or  every  six  months.  They  usually  take  the  form  of  a 
direct  remittance  from  the  manufacturer. 

European  manufacturers  in  making  arrangements  with  local 
commission  agents  in  foreign  markets  often  add  to  an  agreed 
upon  rate  of  commission  on  actual  sales  a  contribution  of  a  small 
amount  of  money  in  the  way  of  salary,  or  agree  to  pay  all  or  a 


294  PRACTICAL  EXPORTING 

part  of  incidental  expenses  undertaken  by  the  agents  in  their 
principal's  interests.  Hence  it  happens  that  many  applicants 
to  American  manufacturers  propose  payments  for  cablegrams, 
postage  and  other  petties.  The  usual  American  practice  is  to 
decline  to  recognize  these  small  charges,  at  least  at  the  outset  of 
business  relations.  If,  however,  manufacturers  secure  commer- 
cial reports  on  local  customers  through  their  agents,  this  surely 
is  an  expense  which  the  maiuifacturer  may  be  expected  to  bear. 
All  of  these  aspects  of  business  ought  to  be  covered  in  clear  and 
simple  language  in  the  contract  made  with  the  agent. 

LOCAL  COMMISSION  AGENTS  AS  SALESMEN 

Most  interesting  of  the  activities  of  the  local  commission  agent 
are  likely  to  be  his  operations  as  a  salesman  and  possible  advan- 
tages he  thus  offers,  although  others  of  his  functions  may  be 
equally  as  important,  as  we  shall  see. 

Advantages  of  a  Local  Salesman. — The  local  agent  is  always 
on  the  spot  and  knows  and  tries  to  sell  all  possible  buyers.  He  is 
able  to  take  advantage  of  special  opportunities — a  proposed  new 
enterprise,  a  destructive  fire,  or  of  the  buying  that  chiefly  takes 
place  at  certain  seasons  of  the  year.  He  is  not  likely  to  be  con- 
tent with  a  single  order  from  some  one  buyer  of  the  goods  he 
represents,  as  the  American  manufacturer,  thousands  of  miles 
away,  is  very  apt  to  be.  The  local  agent,  if  of  the  right  caliber, 
may  even  be  able  to  sell  to  competing  wholesale  houses,  persuad- 
ing them  that  it  is  to  their  interest  to  handle  the  selfsame  goods, 
or  selling  one  article  of  a  line  to  one  house  and  another  article  of 
the  same  line  to  that  house's  competitor. 

He  can  grade  his  selling  prices  so  as  to  protect  his  big  or  his 
wholesale  customers  while  at  the  same  time  promoting  consump- 
tion, or  he  can  grade  prices  according  to  the  terms  which  it  is 
necessary  to  make  to  some  individual  customers,  or  according  to 
their  credit  standing  and  possible  risks  involved.  Furthermore, 
the  local  agent  is  in  position  to  keep  abreast  of  the  operations  of 
competitors  in  his  market.  Then,  too,  in  line  with  a  hint  al- 
ready offered,  the  local  representative  can  take  care  of  municipal 
and  other  official  orders,  where  delicate  personal  negotiations  are 
necessary. 

How  Local  Agents  Sell. — There  is  no  mystery  about  the  op- 


AGENTS  AND  BRANCH  OFFICES  295 

erations  of  these  local  agents.  They  act  precisely  as  would  the 
visiting  salesman  direct  from  the  factory.  They  have  factory 
catalogues  and  whenever  possible  samples  of  the  goods  which 
they  try  to  sell.  Some  important  agents  in  London  and,  for- 
merly, in  Hamburg  for  American  and  other  manufacturers  oper- 
ate as  agents  in  the  name  of  their  principals,  for  whom  they 
carry  consigned  stocks,  using  their  manufacturers'  letter-heads 
and  invoice  forms,  collecting  invoices  in  the  manufacturers' 
names  and  depositing  collections  to  accounts  opened  in  manu- 
facturer's names  in  London  and  Hamburg  banks.  Sometimes 
agents  of  this  description  are  able  to  supply  bonds  covering  lia- 
bilities involved  through  such  transactions.  But  this  basis  is 
exceptional.  Rarely  is  a  local  commission  agent  anything  more 
than  a  salesman,  with  the  correlated  duties  of  that  position. 

Terms  of  sale  as  well  as  prices  are  almost  always  dictated  by 
the  manufacturers  who  entrust  their  agency  to  a  locally  domi- 
ciled representative.  The  principal  fixes  prices  below  which  the 
agent  cannot  sell.  Ordinarily,  if  the  agent  can  secure  excep- 
tional prices  or  terms  for  his  principal  he  is  expected  to  do  so. 
The  English  law  is  that  for  an  agent  to  retain  any  profit  on  a 
transaction  beyond  his  commission  is  a  breach  of  confidence. 

In  certain  markets,  notably  in  South  Africa  and  Australasia, 
the  greater  number  of  orders  secured  by  local  commission  agents 
is  forwarded  through  each  buyer's  agents  in  the  United  States, 
that  is,  export  commission  houses  here.  Usually  the  local  agent 
presents  a  manufacturer's  samples,  urges  an  order,  endeavors  in 
every  possible  way  to  extend  the  business  of  his  principals  and 
sends  a  copy  of  each  order  direct  to  the  manufacturer  in  the 
United  States.  Original  of  the  same  order  is  sent  by  the  local 
buyer  to  that  export  commission  house  in  this  country  which  the 
particular  buyer  in  question  prefers  to  do  business  with.  The 
manufacturer,  having  a  copy  of  the  order  with  a  statement  from 
the  local  commission  agent  as  to  the  export  house  by  whom  that 
order  will  be  confirmed,  knows  who  the  original  buyer  is  and  is 
fully  prepared  to  insist  upon  the  execution  of  the  order  as  given 
to  the  local  agent. 

Manufacturers  utilizing  local  commission  agents  in  such  terri- 
tories believe  they  offer  advantages  over  agencies  given  direct  to 
export  houses,  even  when  the  latter  have  their  own  branches  and 


296         PRACTICAL  EXPORTING 

salesmen  in  the  markets  in  question.  It  is  quite  immaterial  to 
the  local  agent  through  what  export  house  a  local  buyer  prefers 
his  orders  shall  pass.  The  agent's  only  interest  is  to  promote 
to  the  best  of  his  ability  the  interests  of  his  principals  and  to 
pocket  as  many  and  as  large  commissions  as  possible.  He  calls 
on  scores  or  hundreds  of  buyers  who  may  patronize  a  dozen 
different  commission  houses. 

Agents  as  Credit  Judges. — It  is  almost  certainly  a  fact  that 
the  best  local  commission  agents  in  each  important  market  are 
among  the  most  reliable  credit  reporters.  Such  agents  have  ac- 
cess to  the  opinions  of  all  the  local  bankers,  of  other  commission 
agents,  credit  protection  societies  and  collection  attorneys. 
They  are  themselves  largely  relied  upon  for  information  of  th^ 
sort,  of  a  general  character,  by  local  banks  and  others.  A  bank 
will  form  its  opinion  of  a  local  case  on  the  basis  of  its  own  ex- 
perience alone,  plus  possible  inquiries  which  it  may  be  able  to 
make.  The  local  commission  agent  usually  knows  a  good  deal 
more  about  the  business  of  his  customers  than  does  any  one  bank, 
for  drafts  arrive  not  through  one  bank  only  but  through  several, 
perhaps  through  all  local  banks.  A  customer  may  maintain  an 
excellent  standing  Avith  one  bank  but  may  be  in  the  bad  books  of 
another,  quite  unknown  to  the  first.^ 

If  the  agent  is  worth  appointing  at  all,  confidence  ought  to  be 
reposed  in  his  judgment,  experience  and  Icnowledge  of  the  char- 
acter and  idiosyncrasies,  as  well  as  the  financial  status,  of  his 
customers.  If  the  manufacturer  at  first  hesitates  to  trust  to  the 
agent's  discretion  and  judgment  in  such  matters,  it  is  altogether 

1  The  American  consul  at  Valencia,  Spain,  in  a  report  on  credit  methods, 
etc.,  in  that  district,  wrote  as  follows  reg^ardino:  the  usefulness  to  his  prin- 
cipals of  a  successful  local  agent  representing  an  important  British  com- 
bination of  exporters:  "This  successful  agent  invariably  refuses  to  sell 
to  any  intending  purchaser  on  any  credit  terms  if  he  does  not  consider  him 
safe  for  a  three  months'  acceptance.  Every  year  he  forwards  his  principals 
a  detailed  confidential  statement  of  the  actual  rating  and  financial  stand- 
ing of  every  one  of  the  local  dealers  with  inside  information  regarding  their 
progress  or  setbacks  during  the  year,  regarding  their  investments,  the  in- 
crease or  diminution  of  balances  at  local  banks  and  whether  property  ac- 
quired has  been  registered  in  the  dealer's  own  name,  and  even  changes  in 
his  marital  relations  that  might  directly  affect  his  future  commercial  sta- 
bility are  also  recorded.  It  will  be  at  once  apparent  that  information  of 
this  description,  personal,  intimate  and  thorougli.  could  not  be  obtained  by 
American  exporters  through  the  ordinary  channels  and  bank  references." 


AGENTS  AND  BRANCH  OFFICEIS  297 

possible  for  him  to  demand  of  the  agent  that  each  order  be  ac- 
companied by  a  report  from  some  reliable  local  authority  on  the 
buyer  in  question,  confirming  the  agent's  own  ideas.  It  some- 
times happens  that  suspicious  manufacturers,  in  making  ar- 
rangements with  agents,  insist  that  before  any  orders  at  all  are 
taken  a  list  be  submitted  of  all  local  concerns  from  whom  it  is 
expected  to  solicit  orders,  so  that  the  manufacturer,  having  the 
agent's  own  observations  regarding  each  prospect  before  him, 
may  confirm  or  check  the  same  in  advance  by  making  his  own 
direct,  independent  investigation. 

OTHER  FUNCTIONS  OF  COMMISSION  AGENTS 

Professional  export  houses  and  those  manufacturers  who  have 
carefully  investigated  the  principle  of  developing  markets 
through  local  agents,  utilize  these  agents  in  many  other  ways 
than  as  salesmen.  Their  duties  should  by  no  means  end  wuth 
the  soliciting  of  orders.  *'An  agent  should  be  the  representa- 
tive of  his  principal"  it  may  be  repeated.  As  such,  all  his  prin- 
cipal's interests  are  his.  He  should  never  have  been  chosen  as 
agent  in  the  first  place  unless  his  principals  were  prepared  and 
willing  to  use  him  in  cases  involving  considerable  moral  re- 
sponsibility. 

Agents  Facilitate  Placing  Small  Orders. — While  the  indi- 
vidual's character  as  agent  should  alwaj^s  be  maintained  in  re- 
lations with  local  representatives  of  the  sort  we  are  now  consid- 
ering, yet  this  may  still  be  preserved  while  utilizing  the  local 
representative  to  some  extent  as  a  distributor.  In  many  lines  of 
goods  shipments  are  of  small  volume  even  though  they  may  be  of 
large  value.  In  introducing  new  goods  to  a  market  first  orders 
are  almost  sure  to  be  small.  Even  after  goods  have  been  widely 
and  thoroughly  introduced  it  may  often  be  desirable,  if  not 
necessary,  to  bring  out  small  lots  for  certain  customers  or  to 
meet  certain  emergencies.  The  freight  and  other  charges  on 
small  export  shipments  are  always  disproportionately  heavy. 
Hundreds  of  orders  have  been  lost  merely  because  possible  buy- 
ers did  not  care  to  bother  with  the  small  orders  which  only 
they  would  be  willing  to  place.  In  such  cases  as  these  it  is 
altogether  possible,  when  a  good  agent  has  been  appointed,  to 
ship  a  number  of  small  orders  on  one  bill  of  lading  addressed  to 


298  PRACTICAL  EXPORTING 

him  advising  liim  to  distribute  the  several  packages  among  his  re- 
spective customers  as  marks  on  the  packages  may  be  made  to  in- 
dicate. 

If  it  is  desired  to  finance  such  shipments  in  the  usual  way,  the 
manufacturer,  by  agreement  with  him,  may  draw  a  single  draft 
on  the  agent,  say  at  sixty  days'  sight,  supplying  the  agent  with 
individual  drafts  on  the  several  customers.  The  latter  may  be 
drawn  at  sight  and  presented  when  the  goods  are  delivered. 
The  agent,  who  accepts  the  draft  drawn  on  him  by  the  manu- 
facturer when  it  is  presented,  puts  himself  in  funds  to  meet  that 
draft  before  due  date  by  collecting  the  different  parts  of  the  total 
against  the  drafts  on  the  individual  customers.  It  should  be 
noted  that  the  agent  should  only  be  permitted  to  act  in  any  such 
cases  on  behalf  of  his  principals.  He  should  not  act  for  himself, 
unless  in  exceptional  instances  specific  authority  is  given  him. 
The  facility  of  distribution  afforded  by  agents  in  such  a  capacity 
as  has  just  been  suggested  may  often  be  especially  valuable  to 
manufacturers  of  goods,  individual  shipments  of  which  ordi- 
narily aggregate  only  small  volumes. 

Local  Agents  as  Mediators  in  Disputes. — One  of  the  strong- 
est arguments  for  the  employment  of  local  commission  agents  in 
large  foreign  markets  is  the  ability  of  such  an  agent  of  the  right 
sort  to  arrange  to  mutual  pleasure  and  satisfaction  those  little 
difficulties  which  are  bound  to  arise  in  the  best  regulated  family, 
in  compromising  claims,  or  forcing  settlements.  In  efforts  to 
secure  harmony  and  continued  profitable  business  relations,  or, 
on  the  other  hand,  to  put  an  effectual  quietus  on  an  unjust  claim, 
it  will  surely  be  evident  how  superior  must  be  the  position  of 
the  man  on  the  ground  over  that  of  the  manufacturer  who  is 
only  able  to  write  letters  from  far  across  the  ocean.  In  any 
long  range  correspondence  there  are  almost  certain  to  creep  in 
some  expressions  that  will  give  great  offense  to  a  man  who  may 
be  quite  innocent  of  any  attempt  to  impose,  who  may  be  thor- 
oughly justified  in  the  position  he  has  taken. 

The  local  commission  agent,  who  has  sold  him  the  goods  about 
which  trouble  has  arisen,  who  probably  knows  him  intimately 
in  a  personal  as  well  as  a  business  way,  who,  if  he  is  of  the  sort 
that  should  liave  been  appointed  as  agent,  strictly  distinguishes 
personal  and  business  relations,  can  go  to  this  customer  and  ex- 


AGENTS  AND  BRANCH  OFFICES  299 

amine  all  the  cireumstanees.  If  the  customer  is  justified  in  his 
position,  the  local  agent  can  acknowledge  his  factory's  error  and 
either  persuade  the  customer  to  keep  the  goods  and  pay  for 
them,  or  can  take  them  off  his  hands  and  sell  them  to  some  one 
else.  On  the  other  hand,  if  the  customer  is  not  justified  the 
agent  can  personally  point  out  to  him  the  foolishness  of  his 
"bluff,"  insist  upon  his  adhering  to  his  contract  and  see  that 
the  money  due  is  paid. 

It  sometimes  happens  even  with  big  and  rich  houses  that  ac- 
counts are  permitted  to  run  over  due  date.  When  a  local  agent 
is  at  hand  it  is  far  better  for  him  to  go  to  the  cvistomer  to  inquire 
reasons  for  delay,  or  perhaps  with  authority  from  the  manufac- 
turer to  collect,  than  it  is  for  the  manufacturer's  credit  depart- 
ment to  follow  the  course  it  usually  adopts,  with  American 
debtors. 

Once  more,  we  see  how  necessary  it  is  that  none  but  the  right 
man  must  ever  be  appointed  an  agent.  It  also  becomes  evident 
how  valuable  the  services  of  that  right  man  may  be. 

Agents  as  Consignees  of  Stock  Goods. — In  a  great  many 
branches  of  business  it  is  of  the  utmost  importance  that  supplies 
of  goods,  very  especially  spare  parts  or  repairs  for  mechanical 
apparatus  of  all  sorts,  be  on  the  ground  or  available  for  imme- 
diate use.  When  a  machine  breaks  down  it  is  likely  to  be  a  seri- 
ous matter  for  all  concerned  if  the  part  required  cannot  be  made 
locally  or  cannot  be  quickly  obtained,  if  it  must  remain  out  of 
commission  for  from  six  weeks  to  six  months  awaiting  receipt 
from  factory  in  the  United  States.  It  is  seldom  possible  in  any 
but  the  most  highly  developed  countries  of  Europe  to  have  in- 
tricate parts  made  locally  in  satisfactory  fashion.  One  of  the 
most  essential  features  of  the  adequate  and  satisfactory  develop- 
ment of  business  in  engines,  machinery  of  all  sorts,  typewriters, 
automobiles,  even  many  kinds  of  tools,  is  that  buyers  be  per- 
suaded to  purchase  suitable  quantities  of  the  spare  parts  most 
likely  to  be  required,  or  that  a  depot  of  such  parts  be  estab- 
lished at  some  point  convenient  to  many  buyers  from  which  re- 
quirements may  be  immediately  obtained.  The  local  commis- 
sion agent  who  is  entrusted  with  the  sale  of  apparatus  is  the 
logical  resource  of  buyers  when  necessity  arises.  If  any  great 
financial  responsibility  is  involved  in  furnishing  such  an  agent 


300  PRACTICAL  EXPORTING 

with  suitable  stocks  of  parts  or  other  supplies,  he  will  probably, 
if  of  the  right  caliber,  be  able  to  supply  a  bond  to  cover  his 
responsibilities.  In  most  cases,  however,  his  moral  responsi- 
bility should  be  quite  sufficient. 

' '  Del  Credere ' '  Agents. — Although  not  usually  of  great  finan- 
cial responsibility  on  their  own  account,  and  as  a  rule  refusing 
to  accept  responsibility  of  any  sort,  yet  it  sometimes  can  be  ar- 
ranged that  local  commission  agents  will  assume  part  or  all  of 
the  risk  of  loss  involved  in  selling  local  customers,  or  certain  in- 
dividuals among  them.  That  is  to  say,  if  there  chance  to  be 
some  customers  of  an  agent  who  are  not  favorably  looked  upon 
by  local  authorities,  but  in  whom  the  agent  himself  has  every 
confidence  because  of  his  intimate  acquaintance  with  each  cus- 
tomer's business,  he  may  propose  that  he  will  guarantee  pay- 
ment for  all  goods  sold  on  commission  to  those  customers  and 
agree  himself  to  pay  for  the  goods  if  any  of  them  fail  to  do  so. 
It  is  even  sometimes  possible  to  arrange  for  such  a  guaranty  to 
apply  to  all  customers  from  whom  the  agent  may  secure  orders. 
In  such  cases,  the  agent  is  called  a  del  credere  agent,  and  in  con- 
sideration of  his  liability  he  demands  an  extra  commission  called 
a  del  credere  commission. 

As  this  is  a  contingent  liability  only  and  not  likely  to  involve 
any  actual  responsibility  for  large  amounts,  the  tangible  finan- 
cial resources  of  the  agent  are  not  so  important  as  his  moral  re- 
sponsibility, which  is  that  which  chiefly  qualifies  the  agent  in 
any  respect.  He  is  not  often  willing  to  assume  personal  re- 
sponsibility for  the  payment  of  goods  sold  through  his  agency. 
This  is  an  exceptional  arrangement,  rather  than  a  common  one. 

"In  Case  of  Need." — It  is  always  desirable  for  a  manufac- 
turer in  doing  a  large  business  in  a  given  market  to  have  some 
one  on  the  ground  there  to  whom  he  can  apply  for  help  if  any- 
thing goes  wrong  with  the  general  conduct  of  his  business.  We 
have  already  noted  how  local  commission  agents  protect  the  in- 
terests of  their  principals  in  various  ways.  In  drawing  drafts 
on  foreign  customers,  as  we  shall  see  when  we  come  to  consider 
this  phase  of  business  in  a  later  chapter,  it  is  often  desirable  to 
notify  bankers  at  the  other  end  of  the  name  and  address  of  some 
concern  to  whom  they  may  apply  for  payment  or  make  other 
arrangement  in  regard  to  protested  drafts  or  acceptances — "in 


AGENTS  AND  BRANCH  OFFICES  301 

case  of  need."  This  is  the  fonnal  phrase  used  in  giving  such 
notification  to  bankers.  Although  the  "in  case  of  need"  notice 
is  expected  to  convey  the  address  of  some  one  who  will  take  up 
a  protested  draft,  yet  a  strictly  commission  agent  is  often  named 
without  expectation  that  he  will  personally  cover  the  obligation 
which  devolves  upon  his  principals  when  customers  do  not  meet 
their  drafts.  A  certain  leeway  of  time  is  almost  always  avail- 
able, so  that  the  agent  has  an  opportunity  of  cabling  to  his  prin- 
cipals, or  of  making  an  effort  to  bring  pressure  to  bear  on  the 
defaulting  customer  to  pay,  or  possibly  of  inducing  other  local 
concerns  either  to  take  over  the  goods  themselves  and  pay  for 
them  or  to  take  up  the  draft  for  the  account  of  the  foreign  manu- 
facturer. 

Giving  an  agent's  name  as  recourse  "in  case  of  need"  again 
implies  a  great  deal  of  confidence  in  his  judgment  and  discretion, 
even  though  he  is  expected  to  report  immediately  to  his  prin- 
cipals and  follow  cabled  instructions  sent  to  him  in  each  case. 
Bankers  to  whom  such  instructions  are  given  look  to  the  agent 
for  the  principal's  instructions. 

MERCHANT-AGENTS  OR  DISTRIBUTORS 

Many  manufacturers  will  apparently  appoint  any  one  their 
"agent"  who  will  place  an  order  with  them,  but,  it  has  been 
remarked,  it  is  bad  and  confusing  practice  to  use  the  word  agent 
indiscriminately.  It  is  better  to  restrict  its  use  to  the  salesman 
or  other  general  representative  of  his  principal,  and  to  call 
"sole  distributor"  the  merchant  to  whom  goods  are  actually  sold 
and  who  receives  exclusive  rights  for  a  certain  district.  There 
are  a  number  of  considerations  affecting  the  latter  kind  of 
agencies  which  we  must  consider. 

Competing  merchant  houses  do  not  buy  from  each  other  if 
they  can  help  it,  in  Brazil  any  more  than  they  do  in  New  York 
City.  Yet  many  manufacturers  seem  to  ignore  this  fact  utterly 
in  granting  agencies.  However,  there  are  certain  advantages 
in  giving  a  merchant  sole  agency  rights,  and  no  doubt  satisfac- 
tory trade  results  in  many  cases. 

Advantages  of  Merchant-Agents. — As  a  rule  a  manufacturer 
is  likely  to  look  with  especial  favor  on  exclusive  arrangements 
made  with  a  merchant  who  has  been  favorably  reported.     The 


302  PRACTICAL  EXPORTING 

manufacturer  lias  but  one  account  to  carry  on  his  books. 
Usually-,  large  shipments  are  the  rule  and  there  is  but  one  risk 
instead  of  a  considerable  number  of  scattered  shipments  and 
risks.  The  merchant-agent  can  sometimes  be  induced  to  guar- 
antee a  certain  volume  of  annual  business.  Moreover,  if  the 
merchant-agent  is  a  large  and  w^idely  known  concern  the  fact 
that  he  has  accepted  the  manufacturer's  agency  has  a  distinct 
advertising  value  in  itself.  The  connection  is  apt  to  be  looked 
upon  by  the  manufacturer  with  some  pride  and  regarded  as  a 
credit  to  the  factory. 

It  is  sometimes  believed  th'at  the  interest  of  the  merchant  who 
actually  buj^s  and  pays  for  the  goods  he  handles  is  far  more  keen 
than  is  that  of  an  agent  who  merely  sells  goods  on  commission 
without  assuming  any  risk  of  his  own.  The  merchant's  own 
risk  when  he  has  goods  in  stock  may  make  for  his  activity  in  dis- 
posing of  them  and  developing  generally  larger  trade.  If  the 
merchant-agent  be  a  large  and  old  concern,  his  responsibility  and 
prominence  are  favorably  regarded.  On  the  other  hand,  if  it 
is  a  young  house,  it  may  be  preferred  because  thought  apt  to 
show  more  push  and  aggressiveness  and  hence  likely  to  develop 
especially  good  results. 

Dangers  of  Merchant-Agents. — Although  many  advantages 
are  attached  to  agencies  placed  in  the  hands  of  large  and  re- 
sponsible merchants,  yet  there  are  disadvantages  and  sometimes 
real  dangers  attending  this  course  which  must  be  taken  into  con- 
sideration. In  the  first  place,  there  are  few  exclusive  wholesale 
establishments  in  a  great  many  of  our  principal  foreign  markets. 
Many  large  concerns  which  do  a  wholesale  business  are  at  the 
same  time  retailers,  and,  obviously,  a  retail  establishment  can- 
not sell  its  competing  retailers  in  the  same  city.  The  manufac- 
turer's goods  are,  therefore,  restricted  in  a  large  place,  perhaps 
the  most  important  place  in  a  whole  country,  to  one  retail  shop 
or  at  most  to  that  shop  and  a  very  limited  number  of  minor  re- 
tail establishments,  perhaps  in  the  outskirts  of  the  town  or  other- 
wise so  situated  that  they  really  do  not  enter  into  competition 
with  the  agent  himself.  If  that  agent  in  his  own  establishment 
does  a  sufficiently  large  business,  or  if  the  city  in  question  is 
small,  this  state  of  affairs  may  be  satisfactory  to  the  manufac- 
turer. 


AGENTS  AND  BRANCH  OFFICES  303 

In  this  coimeetion,  too,  the  question  of  territory  to  be  granted 
to  a  "sole  distributor"  is  of  importance.  Geographical  condi- 
tions usually  decide.  For  example,  a  well  known  authority  on 
South  America  advises  as  to  Brazil  that  separate  distributors 
should  be  appointed  in  Rio,  Santos,  Bahia,  Pernambuco  and 
Para — because  the  freight  on  goods  from  New  York  direct  to 
any  of  these  ports  is  less  than  local  freights  between  some  of 
them. 

Again,  the  manufacturer's  goods  become  the  merchant's  prop- 
erty; his  interests  are  not  always  the  merchant's  interests.  The 
latter  may,  for  example,  have  little  or  no  ambition  to  push  a 
manufacturer's  special  brand.  He  is  always  looking  for  the 
goods  that  sell  most  easily  and  most  profitably.  It  is  rather  to 
his  disadvantage  to  create  a  demand  for  a  given  brand,  unless  he 
is  positively  assured  of  its  exclusive  control  for  a  long  period  of 
years.  Usually,  it  devolves  upon  the  manufacturer  himself  to 
create  and  build  up  a  demand  for  his  product ;  when  it  is  a 
((uestion  of  a  brand,  to  promote  aggressively  its  publicity.  A 
merchant-agent  is  usually  sure  under  other  conditions  to  prefer 
"neutral"  or  unnamed  articles  of  similar  class. 

Merchants  May  "Kill"  an  Agency.— ^Many  an  agency  has 
been  secured  by  a  foreign  merchant  through  placing  a  small 
"initial"  order  with  the  deliberate  intention  of  smothering  it, 
of  thus  preventing  the  introduction  in  his  market  of  a  line 
of  goods  competing  with  one  M^hieh  he  already  handled  and 
which  he  preferred  to  continue.  I\Ianufacturers  themselves  do 
not  alwaj'S  look  very  closely  into  the  motives  which  ma}^  prompt 
a  merchant  in  seeking  or  accepting  an  agency.  Sometimes  a 
manufacturer  seems  to  be  so  delighted  by  an  opportunity  of  sell- 
ing a  few  goods  to  a  prominent  merchant  that  he  grants  an  ex- 
clusive agency,  even  when  he  knows  that  the  merchant  himself 
is  already  handling  one  or  several  immediately  competing  lines. 
Of  course,  it  is  to  be  confessed  that  a  merchant  can  sometimes  do 
justice  to  two  or  three  lines  competing  in  a  general  way,  but 
surely  propositions  for  exclusive  agencies  in  any  such  cases 
should  be  very  carefully  studied. 

Competing  Agencies. — It  has  been  the  accepted  practice 
among  American  manufacturers  of  machine  tools  to  seek  orders 
from  and  give  agencies  to  a  very  limited  number  of  certain 


304  PRACTICAL  EXPORTING 

prominent  machine  tool  dealers  in  Europe.  There  is  a  list  of 
these  European  dealers  that  is  so  well  known  to  every  American 
manufacturer  in  this  line  that  their  names  can  be  repeated  from 
memory  because  ten  or  a  dozen  of  them  control  agencies  for 
practically  every  American  manufacturer  in  their  line.  This 
need  not  imply  that  manufacturers  who  have  solicited  and  been 
pleased  to  give  such  agencies  do  not  actually  receive  orders  for 
their  products.  But  it  does  seem  altogether  likely  to  the  author 
that  a  lathe  manufacturer,  for  example,  might  obtain  a  very 
much  larger  business  from  a  given  territory  through  adopting 
other  means  of  developing  trade  than  by  placing  his  agency  with 
one  of  these  prominent  dealers  who  at  the  same  time  handles  six 
or  eight  other  makes  of  lathes. 

The  lengths  to  which  the  desire  to  secure  an  order  may  lead 
are  illustrated  in  the  ways  in  which  some  of  our  manufacturers 
have  tied  up  attractive  territories.  A  manufacturer  of  billiard 
tables  gives  his  sole  and  exclusive  agency  for  a  rich  field  to  a 
new  hotel  de  luxe  which  orders  a  dozen  tables  for  its  grand  estab- 
lishment. A  maker  of  laundry  machinery,  securing  an  envied 
opportunity  to  install  a  complete  plant  for  a  big  steam  laundry 
in  the  capital  of  a  great  country,  throws  in  with  his  machinery 
its  exclusive  control  for  all  that  country.  Just  how  it  is  ex- 
pected that  a  hotel  billiard  room  or  an  operating  steam  laundry 
will  be  ambitious  to  supply  to  rival  establishments  what  they 
themselves  evidently  believe  superior  apparatus,  thus  placing 
rivals  in  a  better  position  to  compete  with  themselves,  is  a  ques- 
tion which  possibly  such  manufacturers  have  answered  to  their 
own  satisfaction.  Without  an  inside  knowledge  of  the  facts  it 
would  seem  to  most  people  that  other  and  more  satisfactory  ways 
might  have  been  chosen  for  developing  trade  in  such  markets. 

Betrayal  by  Foreign  Agents. — As  has  been  noted,  a  great  deal 
of  nonsense  is  current  as  to  the  prime  necessity  of  having  Amer- 
icans to  represent  American  goods.  Americans  themselves  are 
about  the  only  people  who  do  not  seem  anxious  to  handle  other 
than  their  own  goods.  Some  American  export  houses  have  even 
been  known  to  refuse  to  handle  British  goods,  although  they  had 
London  offices  equipped  for  buying  and  shipping  goods  from 
England.  British  and,  before  the  war,  German  houses  in  China 
opened  New  York  offices  for  buying  American  goods,  not  as  orna- 


AGENTS  AND  BRANCH  OFFICES  305 

ments.  British  and  German  houses  in  South  America  are  most 
emphatically  not  silavishly  restricted  to  goods  made  in  their  re- 
spective countries.  They  buy  indiscriminately,  as  the  values 
and  desirability  of  goods  are  made  to  appeal  to  them.  They 
have  not  the  remotest  intention  of  buying  American  or  any  other 
goods  unless  they  think  they  see  satisfactory  profits  in  them,  nor 
will  they  replace  goods  of  one  nationality  by  goods  of  another, 
even  of  their  own,  unless  that  other  offers  greater  profits  or  ad- 
vantages of  some  sort.  Perhaps  the  most  important  English 
manufacturer  of  agricultural  machinery  has  a  British  house  as 
its  agent  in  Buenos  Aires,  but  its  goods  in  Rio  de  Janeiro  have 
been  controlled  by  a  German  concern,  in  spite  of  the  many  good 
merchants  of  British  nationality  in  Brazil.  There  are  a  number 
of  American  citizens  acting  as  buyers  for  British,  German,  Bel- 
gian and  other  European  houses  in  South  America. 

It  may  be  observed,  too,  that  even  if  we  had  innumerable 
American  import  houses  established  in  promising  foreign  fields 
they  would  not  greedily  grasp  each  and  every  American  line  that 
was  oft'ered  to  them.  They  would  not,  if  for  no  other  reason, 
because  they  could  not.  Nor  would  it  be  a  case  of  first  come, 
first  served.  If  they  were  the  right  sort  of  merchants  they 
would  do  precisely  as  do  their  competitors — choose  those  lines 
which  most  commend  themselves  to  them  and  refuse  to  handle 
others.  It  would  then,  as  it  is  now,  be  necessary  for  any  given 
manufacturer  to  seek  out  that  merchant,  no  matter  what  his  na- 
tionality, who  could  be  persuaded  to  take  up  the  line  on  a  satis- 
factory basis. 

In  any  of  the  Latin- American  markets  there  are  comparatively 
few  large  native  importers.  Most  of  the  oversea  business  is 
handled  by  British,  German,  Italian  or  French  houses  domiciled 
in  these  countries.  A  notable  example  of  mixed  nationality  is 
to  be  found  in  the  case  of  perhaps  the  largest  concern  doing 
business  in  Venezuela.  The  concern  in  question  is  British  in 
nationality,  but  its  principal  business  interests  are  in  trade  with 
the  United  States.  Among  its  four  branches  in  Venezuela,  two 
were,  until  the  war  broke  out,  managed  by  Englishmen  and  two 
by  Germans.^ 

1  Tlio  American  vice  consul  general  at  Singapore  reported  in  1912: 
"American   manufacturers   can   do   business   in   foreign   countries   through 


306  PRACTICAL  EXPORTING 

While  it  is  by  no  means  to  be  denied  that  merchants  of  Ger- 
man or  British  birth,  no  matter  where  they  may  be  doing  busi- 
ness, are  sentimentally  inclined  first  for  goods  of  German  or 
British  origin,  yet  none  of  them  are  so  short-sighted  as  to 
imagine  that  it  is  possible  for  them  to  do  the  most  profitable  busi- 
ness solely  and  exclusively  with  such  goods. 

Substituting-  European  for  American  Goods. — It  is  doubtless 
true  that,  for  example,  German  merchants  in  a  given  territory 
having  found  a  market  for  certain  American  goods  have  sent 
samples  of  those  goods  back  to  Germany  to  be  imitated  or  dupli- 
cated by  German  manufacturers  for  the  benefit  of  these  expatri- 
ated merchants. 

This,  however,  is  not  a  matter  of  patriotism  or  of  prejudice 
against  American  goods.  It  is  due  to  the  by  no  means  uncom- 
mon ambition,  especially  among  Germans,  always  to  find  the 
cheapest  source  of  supply.  In  the  same  way  German  merchants 
in  Germany  have  been  known  to  send  samples  of  American 
wooden  clothes  pins  to  Sweden  for  imitation  there,  in  the  ex- 
pectation of  obtaining  from  Sweden  cheaper  goods  than  they 
could  get  either  from  the  United  States  or  in  their  own  Ger- 
many. Tendencies  such  as  these  are  logical  and  to  be  expected 
in  the  course  of  any  business,  might  even  be  followed  by  Amer- 
ican merchants  themselves. -.To  guard  against  them  is,  in  any 
case,  the  duty  of  the  manufacturer,  and  he  cannot  rely  upon 
agents  of  any  category  whatever  to  protect  interests  which  he 
himself  neglects. 

Support  of  Merchant-Agents. — When  an  agency  has  been  en- 
trusted to  a  merchant  in  a  foreign  market  he  deserves  and 
should  receive  the  same  generous  and  unvarying  support  as 
should   any  other  kind   of   an   agent.     Unfortunately,   one   of 

foreign  firms  already  established  and  the  patriotic  idea  of  an  American 
firm  to  represent  American  manufacturers  should  not  interfere  with  Ameri- 
can trade  extension  through  channels  already  existing.  A  large  part  of 
the  trade  of  this  district  is  carried  on  in  native  bazars  to  be  in  touch  with 
which  requires  years  of  steady  efi'ort  by  a  new  firm.  The  foreign  houses 
already  in  the  field  are  intimately  connected  with  these  bazar  mercliants 
and  can  always  reach  the  proper  parties  to  push  the  sales  of  any  article 
they  represent.  Moreover,  they  are  established  here  to  make  the  largest 
profit  possible  and  if  they  are  shottii  that  an  American  manufactured  arti- 
cle is  better  or  cheaper  than  similar  articles  of  other  countries  they  will 
press  its  sale  energetically." 


AGENTS  AND  BRANCH  OFFICES  307 

those  characteristics  of  American  business  which  have  contrib- 
uted to  anything  but  an  admiration  for  our  methods  in  some 
foreign  countries  is  the  non-observance  of  this  principle. 

A  certain  American  manufacturer  appeals  to  an  American 
consul  in  Costa  Rica  to  secure  an  agent  for  his  line  in  that  coun- 
try. On  the  very  day  this  manufacturer's  letter  is  received,  a 
dealer  in  San  Jose  is  making  a  special  display  of  the  goods  made 
by  this  same  manufacturer,  and  is  running  large  advertisements 
of  these  goods  in  the  local  newspapers.  The  consul  reports  the 
facts  to  the  manufacturer.  The  latter  insists  in  reply  that  he 
lias  no  agent  in  Costa  Rica.  The  consul  investigates,  receives 
from  the  local  dealer  an  original  letter  from  the  manufacturer 
dated  within  a  year,  definitely  and  distinctly  appointing  him  as 
that  manufacturer's  sole  representative  for  the  whole  country. 
Perhaps  the  manufacturer  had  quite  forgotten  this  little  detail, 
perhaps  he  had  made  a  change  in  the  personnel  of  his  export 
department,  perhaps  he  was  trusting  to  luck  that  he  might  some- 
how get  in  touch  with  a  more  desirable  agent  without  the  facts 
becoming  known. 

Another  American  manufacturer  of  a  highy  desirable  and 
widely  popular  line  has  become  rather  humorously  well  known 
throughout  the  world  as  changing  his  local  agencies  almost  from 
year  to  year.  This  manufacturer's  representatives  visit  large 
foreign  markets  periodically  and  more  often  than  not  approach 
a  new  local  concern  with  an  agency  suggestion,  if  the  new  con- 
cern is  willing  to  buy  a  large  stock  of  goods  for  the  sake  of  get- 
ting the  agency  away  from  the  former  agents.  Then  a  change 
is  made,  with  the  result  that  two  houses  in  the  same  market  are 
pretty  well  stocked  up  with  the  manufacturer's  line.  "When 
this  has  proceeded  through  two  or  three  successive  performances 
the  result  is  that  the  market  is  pretty  well  glutted  with  these 
goods. 

A  letter  from  a  firm  in  China  complains  of  the  traveling  repre- 
sentative of  an  American  firm:  "This  very  intelligent  individ- 
ual then  proceeded  to  a  grocer  and  a  draper  and  tried  to  in- 
duce them  to  take  up  his  agency  although  he  well  knew  that  we 
are  the  only  people  pushing  and  advertising  his  factory's  goods 
in  this  district,  and  he  also  knew  that  our  stock  of  his  goods  was 
a  fairly  complete  one."     Such  methods  in  "protecting"  a  for- 


308  PRACTICAL  EXPORTING 

eign  agency  are  not  apt  to  conduce  to  great  enthusiasm  regard- 
ing a  manufacturer's  goods  on  the  part  of  any  respectable  busi- 
ness house.^ 

Support  to  a  merchant-agent  may  be  extended  in  a  great  num- 
ber of  ways.  It  may  include  interested  cooperation  in  the  way 
of  local  advertising,  of  consumer  samples,  of  circular  letters  ad- 
dressed direct  by  the  manufacturer  in  the  United  States  to  actual 
or  prospective  customers  of  the  foreign  merchant  in  his  own  dis- 
trict. It  may  include  occasional  visits  of  traveling  salesmen 
from  the  United  States. 

Protection  of  Exclusive  Agents. — An  exclusive  agency  must 
be  "exclusive"  in  the  full  sense  of  the  word.  It  must  be  con- 
fessed that  a  few,  let  us  be  thankful  there  have  been  but  few, 
manufacturers  of  our  own  as  of  other  countries  have  deliberately 
disregarded  their  obligations  under  an  agency  contract,  have 
granted  "exclusive"  rights  to  any  one  who  cared  to  apply  for 
them — provided  an  order  would  be  placed.  Not  very  long  ago 
six  different  business  houses  in  Buenos  Aires  were  at  one  and  the 
same  time  each  claiming  to  be  the  "exclusive  representative"  in 
that  market  of  a  certain  American  manufacturer.  Such  prac- 
tices are  not  merely  to  be  dismissed  as  regrettable — they  are 
something  worse  than  dishonorable  and  dishonest.  One  such  in- 
stance casts  infinite  discredit  on  the  whole  body  of  American 
manufacturers  and  exporters,  works  endless  and  enduring  harm 
to  American  prestige  and  commerce.  Moreover  the  practice  is 
suicidal  on  the  part  of  the  offender.  There  ought  to  be  a  league 
of  exporters  to  save  these  brilliantly  "sharp"  specimens  from 
themselves,  to  preserve  the  American  name  from  their  abuse  of 
it.  "Work  in  cooperation  and  by  agreement  with  agents,  to  pro- 
mote business  for  the  benefit  of  all  concerned,  is  one  thing ;  work 
in  opposition  to  the  agents'  interests  is  quite  another. 

1  The  advice  piven  by  the  South  American  traveling  representative  of  an 
American  fountain  pen  manufacturer  is  to  reserve  the  right  to  establish 
just  as  many  dealers  as  the  manufacturer  may  desire  in  a  territory  where 
general  agencies  are  given,  but  in  every  instance  to  allow  the  general  agent 
a  certain  commission  on  all  goods  sold  to  other  parties.  This  theory  is 
that  in  such  an  arrangement  the  manufacturer  is  not  confined  to  a  single 
concern  and  that  the  total  business  cannot  fail  to  be  increased  to  the  satis- 
faction of  general  agent  as  well  as  manufacturer,  because  the  more  dealers 
Avho  handh'  tlie  goods,  the  more  the  advertisement  and  the  greater  the 
demand  to  follow. 


AGENTS  AND  BRANCH  OFFICES  309 

FOREIGN  BRANCHES  OF  AMERICAN  CONCERNS 

The  keynote  of  much  recent  and  animated  discussion  regard- 
ing American  export  practice  is  the  insistent  advice  that  Amer- 
ican manufacturers  establish  branch  houses  in  foreign  markets. 
This  sometimes  seems  to  be  a  variation  of  the  ancient  "Amer- 
ican exposition"  scheme.  Now,  foreign  branches  nray  be  of 
varied  character  and  beyond  any  question  be  of  unlimited  ad- 
vantage to  trade  in  a  great  many  instances.  We  have  to  ex- 
amine the  question  from  all  points  of  view  as  every  manufac- 
turer who  is  successful  in  his  export  relations  will  sooner  or  later 
be  confronted  with  the  desire,  if  not  the  apparent  necessity,  of 
establishing  such  branches  as  his  business  grows  and  becomes 
large  and  important.  Nowadays,  too,  we  have  the  "combina- 
tion" house  in  a  foreign  field  proposed  and  urged.  But  let  this 
fact  be  well  noted — there  are  comparatively  few  branch  houses 
maintained  in  foreign  markets  by  manufacturers  of  any  nation- 
ality. 

Branches  as  Selling-  Agencies. — A  foreign  branch  house  may 
either  be  restricted  to  operations  as  a  selling  agency,  or  it  may 
act  as  a  merchant  carrying  stocks  of  goods.  In  contemplating 
the  establishment  of  his  own  house  in  any  foreign  market  the 
American  or  any  one  else  must  count  on  the  active  and  very 
likely  bitter  competition  of  old  merchants  in  that  market,  even 
if  the  branch  acts  only  as  a  selling  agency  and  even  if  its  selling 
efforts  be  strictly  confined  to  wholesale  importers  whom  every 
effort  is  made  to  protect.  The  big  local  concerns  are  certain  to 
look  with  grave  suspicion  upon  the  establishment  even  of  a  sell- 
ing agency  in  their  own  districts.  They  are  sure  to  question 
"why."  "Why  are  you  doing  this  yourself?  Why  come  and 
locate  here  to  try  to  sell  us  ? "  They  are  bound  to  feel,  at  least 
in  the  beginning,  that  the  American  house  has  some  ulterior  aim 
not  to  their  advantage. 

One  of  the  old  established  local  houses  will  probably  not  be 
greatly  pleased  if  all  of  its  principal  competitors  are  also  to  be 
drummed  hard  and  regularly.  It  may  perhaps  be  even  less  de- 
lighted with  the  idea  that  the  whole  market  is  going  to  be  cov- 
ered. The  big  local  houses  will  look  on  a  permanent  local  estab- 
lishment of  the  foreign  manufacturer  in  an  entirely  different 


310  PRACTICAL  EXPORTING 

light  from  that  in  which  they  regard  the  occasional  visits  of  a 
traveling  man  representing  the  foreign  factory.  Suspicion  and 
even  active  opposition  are,  therefore,  to  be  expected  with  the 
establishment  of  a  permanent  sales  agency  in  a  foreign  market. 

This  need  not  argue  that  such  an  establishment  is  not  highly 
desirable  and  may  not  result  most  successfully.  Everything, 
however,  will  depend  on  the  tact  and  diplomacy  shown  by  the 
manager  of  the  foreign  branch  in  his  negotiations  and  associa- 
tions with  former  customers  and  with  important  prospects  in 
the  market.  Suspicion  and  opposition  may  be  overcome,  but  a 
certain  margin  of  months  if  not  of  years  must  be  allowed  for 
that  process.  A  warning  in  this  respect  is  all  that  is  necessary, 
for  there  can  be  no  question  at  all  as  to  possible  advantages  and 
probable  success  of  some  foreign  branches  if  properly  promoted 
and  managed,  and  if  based  on  an  adequate  knowledge  of  local 
conditions  and  of  prospects  for  the  goods  concerned. 

Branches  as  Merchants. — When  a  foreign  branch  house  is  es- 
tablished to  carry  stocks  of  goods,  it  immediately  takes  its  place 
in  the  ranks  of  other  local  importers  or  wholesale  dealers.  What- 
ever the  advantages  of  such  an  establishment  may  be,  and  in  many 
cases  there  are  great  and  undeniable  advantages,  yet  this  fact 
must  not  be  overlooked.  Suspicion  of  a  permanent  local  selling 
agency  becomes  certainty  among  the  local  merchants  when  goods 
are  put  in  stock  by  the  new  enterprise.  It  is  reasonably  to  be 
expected  that  old  customers  of  la  class  to  compete  with  the  new 
merchant  will  be  lost,  and  their  active  and  probably  bitter  com- 
petition will  have  to  be  encountered.  When  the  branch  itself  is 
operating  as  a  wholesaler  it  will  have  no  little  trouble  in  per- 
suading its  competitors  to  buy  from  it. 

It  will  probably  have  a  long  and  hard  struggle  to  get  itself 
established.  In  more  than  one  actual  instance  of  such  foreign 
establishments  by  American  manufacturers  it  has  happened 
that,  in  order  to  get  started,  they  have  had  to  accept  in  the  be- 
ginning and  for  a  period  of  several  years  credits  of  second  qual- 
ity or  worse — risks  that  the  older  local  concerns  did  not  want, 
accepted  only  on  the  severest  terms,  declined  altogether,  or 
handled  so  rudely  that  customers  of  this  class  eagerly  sought 
new  connections.     Several  American  factories  have  sufifered  se- 


AGENTS  AND  BRANCH  OFFICES  311 

vere  losses  for  several  years  in  their  foreign  establishments,  even 
though  such  branches  have  ultimately  proved  profitable. 

There  are  undeniable  advantages  in  the  establishment  of  such 
local  wholesale  branches  in  more  ways  than  immediately  sug- 
gest themselves.  Having  on  hand  stocks  of  goods  for  the  im- 
mediate supply  of  local  requirements  is  one  of  the  obvious  ad- 
vantages. In  addition  it  often  happens  in  some  markets  that 
although  the  advantages  of  foreign  made  goods  are  recognized, 
although  such  foreign  goods  can  be  imported  cheaply,  yet  the 
local  trade  objects  to  the  time  and  trouble  involved  in  the  neces- 
sity of  importing  goods,  of  placing  orders  and  often  paying  for 
large  quantities  in  advance,  and  accordingly  continues  the  use 
of  locally  manufactured  goods  of  inferior  quality  and  possibly 
higher  prices.  The  author  encountered  this  condition  at  one 
time  in  the  case  of  American  wheelbarrows  in  a  new  market.  A 
quantity  was  imported  by  way  of  trial.  Total  landed  costs  came 
out  cheaper  than  prices  of  the  crude  native  barrows,  and  the 
American  goods  were  acknowledged  to  be  superior.  Importers 
were  pleased  with  the  experiment,  but  could  not  be  persuaded  to 
repeat  it,  because  it  did  not  seem  worth  while  tying  up  their 
funds  in  this  sort  of  business. 

Increased  Costs  of  Stock  Goods. — Of  course,  costs  of  goods 
will  usually  be  increased  when  stocks  are  carried  by  foreign 
branches.  Interest  on  investment  and  new  overhead  expenses 
have  to  be  taken  care  of.  It  is  probable  that  in  both  regards  the 
charges  of  the  new  American  branch  will  be  considerably  heavier 
than  similar  charges  of  older  established  local  merchants. 
Therefore,  even  from  the  retail  trade,  only  limited  profits  can  be 
anticipated,  at  least  until  the  manufacturer's  local  organization 
has  been  highly  developed. 

One  large  American  company  which  has  an  important  organi- 
zation in  Great  Britain  has  been  accustomed  to  quote  two  sets 
of  prices — one  for  goods  from  British  stock,  another  applying  to 
shipments  from  American  factory.  Quotations  from  British 
stocks  were  10  per  cent,  higher  than  the  others.  None  the  less, 
the  British  enterprise  has  been  successful  because  customers 
throughout  tributary  territory,  on  the  Continent  and  even  as  far 
as  Egypt,  have  often  been  glad  to  pay  the  extra  10  per  cent,  and 


312  PRACTICAL  EXPORTING 

save  the  time  involved  in  getting  the  goods  over  from  the  United 
States.     European  markets  lie  close  together  like  our  own  States. 

As  illustrating  the  policies  evolved  in  the  support  of  such  mer- 
chant branches,  the  practice  of  another  large  American  company 
may  be  noted.  This  concern  carries  stocks  at  six  or  eight  dis- 
tributing centers  in  Europe,  sometimes  in  its  own  name,  some- 
times in  cooperation  with  local  merchants.  Each  branch  pub- 
lishes a  monthly  stock  list  showing  sizes  of  machines  on  hand.  If 
any  one  branch  has  a  call  for  a  certain  kind  or  size  of  which  it 
is  temporarily  out  of  stock,  it  can  tell  in  a  moment  by  reference 
to  stock  lists  received  from  other  branches  where  the  required  ma- 
chine can  be  quickly  secured  through  the  despatch  of  a  tele- 
gram. 

"Combination"  Offices  Abroad. — Contrary  to  what  seems  to 
be  the  popular  impression,  the  effort  to  develop  American  trade 
in  a  certain  market  through  the  establishment  there  of  a  local 
enterprise  controlled  by  a  combination  of  manufacturers  is  by 
no  means  a  new  one.  We  have  had  more  than  one  precedent. 
Thirty  years  ago  or  more  an  American  boot  and  shoe  syndicate 
was  established  in  London  by  a  combination  of  six  or  eight 
American  manufacturers  of  different  kinds  of  shoes.  That  en- 
terprise, so  far  as  an  outsider  could  judge,  was  fairly  successful 
for  a  long  time  and  contributed  materially  to  the  development 
of  our  American  exports  of  boots  and  shoes  to  Europe,  although 
the  composition  of  the  syndicate  changed  from  time  to  time. 
In  a  paper  presented  to  the  American  Academy  of  Political  and 
Social  Science,  Franklin  Johnston  of  the  American  Exporter 
remarked  in  this  connection:  "Nor  can  there  be  any  economic 
objection,  for  in  theory  such  organizations  are  sound,  but  in 
practice  the  difficulties  of  securing  the  right  personnel,  over- 
coming the  opposition  of  local  importers,  and  satisfyng  all  the 
constituent  manufacturers,  some  of  whom  are  bound  to  feel  that 
their  share  of  the  sales  is  less  than  their  share  of  the  expense, 
are  so  great  as  to  make  its  general  success  not  perhaps  impossi- 
ble, but  certainly  difficult." 

Certain  failings  of  human  nature  have  to  be  considered  in  the 
case  of  combination  efforts  of  this  sort,  as  in  the  case  of  com- 
bination traveling  men.  Jealousy  among  the  manufacturers  en- 
gaged in  a  combination,  the  desire  of  one  to  dictate  and  man- 


AGENTS  AND  BRANCH  OFFICES  313 

age  the  policies  of  the  whole  combination,  dissatisfaction  on  the 
part  of  some  members  as  to  their  pro  rata  share  in  the  business — 
these  among  other  elements  have  hitherto  worked  against  the 
permanent  success  of  most  such  proposals.  One  or  several 
manufacturers  will  receive  comparatively  little  business  and  at 
the  earliest  opportunity  will  drop  out  of  the  combination.  One 
or  two  who  may  have  received  a  large  volume  of  business  will 
either  be  dissatisfied  with  the  management  of  the  enterprise  or 
believe  themselves  strong  enough  to  be  justified  in  withdrawing 
to  set  up  their  own  individual  branches.  It  seems  doubtful  if  the 
combination  or  syndicate  plan  will  ever  be  a  great  permanent 
success  unless  it  may  be  in  the  nature  of  what  we  call  a  trust, 
perhaps  with  a  pooling  agreement,  distributing  orders  for 
strictly  competitive  or  standard  articles  on  the  basis  of  tonnage 
requirements  of  the  several  factories,  or  dividing  annual  profits. 

Similar  efforts  on  the  part  of  European  nations  have  not  been 
unknown.  Few  of  them  can  be  pointed  out  as  successes.  Am- 
bitious. Austrian  and  Hungarian  combination  schemes  have 
failed  at  many  points.  One  of  the  most  notable  of  European 
projects  is  not  a  proper  "combination"  at  all,  but  is  a  separately 
capitalized  individual  business  which  simply  controls  lines  of 
the  well  known  English  manufacturers  who  are  probably  the 
principal  shareholders  in  it.  It  is,  however,  operated  without 
interference  from  these  manufacturers  as  an  independent  busi- 
ness. Indeed,  it  seems  not  too  much  to  declare  that  it  is  only 
through  the  constitution  of  such  selling  companies  which  shall 
be  independently  managed  that  prospects  for  continuous  and 
permanent  success  lie.  However,  such  companies  differ  little 
from  the  enterprise  we  already  know  so  well  and  call  export 
commission  houses,  excepting  possibly  that  they  may  be  dis- 
tinguished as  specialized  export  houses.  Yet  many  of  our  exist- 
ing export  houses  are  already  specialized,  the  character  of  their 
business  varying  in  the  several  markets  in  which  they  operate. 

"American  Expositions." — Any  business  man  traveling 
abroad  is,  even  now  as  for  generations  past,  almost  sure  to  en- 
counter constantly  the  suggestion  that  the  right  thing  for  Amer- 
ican manufacturers  to  do  is  to  establish  a  "permanent  exposi- 
tion of  American  goods"  in  some  specified  locality.  Thejdea 
is  an  old  one,  hoary  with  age.     In  addition  to  the  intrinsic  weak- 


314  PBACTICAL  EXPORTING 

ness  of  the  idea  Ave  have  the  discouraging  precedents  of  tw^o  such 
expositions  attempted  in  the  past.  The  expositions  of  American 
goods  in  Caracas  and  in  Shanghai  were  both  dismal  failures. 
Yet  in  the  face  of  them  we  have  new  projects  of  this  sort  spring- 
ing up  from  time  to  time. 

In  the  very  nature  of  things  an  ' '  exposition ' '  cannot  sell  goods 
by  itself.  The  mere  despatch  from  the  United  States  of  a  clever 
manager  to  such  an  exposition  in  a  foreign  country  is  by  no 
means  enough  to  ensure  the  development  of  trade.  A  showcase 
without  a  salesman  accomplishes  little.  As  a  popular  advertise- 
ment of  national  American  industries  expositions  might  in  some 
instances  be  worthy  of  support,  but  the  large  amounts  of  money 
they  cost  are  only  to  be  regarded  as  the  most  extravagant  of  all 
imaginable  forms  of  advertising. 

Quite  different  from  any  "American  exposition"  are  the  in- 
dividual efforts  made  by  some  American  manufacturers  in  the 
establishment  in  foreign  countries  of  their  own  retail  shops. 
Thus,  the  largest  American  sewing  machine  company  has  cov- 
ered even  the  remotest  quarters  of  the  globe  with  its  own  estab- 
lishments. American  kerosene  and  cigarettes  are  in  some  terri- 
tories distributed  by  American  manufacturers.  Prominent  boot 
and  shoe  manufacturers  have  planted  handsome  and  attractive 
shops  on  the  main  business  streets  of  the  principal  capitals  of 
the  world ;  so  have  a  great  American  photographic  goods  com- 
pany and  certain  typewriter  and  cash  register  manufacturers, 
and  so  have  certain  Americans  who  sell  imitation  jewelry.  In 
no  case  do  or  can  such  branches  shut  out  competition  from  other 
American  manufacturers  in  the  same  lines  operating  in  more 
usual  ways. 

An  American  department  store  has  apparently  been  highly 
successful  in  London,  although  it  owes  its  success  to  American 
methods  modified  by  local  requirements,  rather  than  to  American 
goods.  It  is  like  all  other  London  department  stores  in  that  it 
carries  some  American  goods  along  with  many  other  British  and 
Continental  goods.  It  may  verj^  likely  be  true  that  there  are 
attractive  opportunities  for  the  establishment  of  other  American 
department  stores  in  many  otlier  capitals,  and  possil)ly  such 
estabUshmeiits  Avould  redound  greatly  to  the  prestige  of  Amer- 
ican interests  in  general. 


AGENTS  AND  BRANCH  OFFICES  315 

Foreign  Branches  Subject  to  Foreign  Laws. — It  is  hardly  to 
be  expected  that  any  wise  American  manufacturer  will  plunge 
unprepared  into  the  foreign  branch  scheme.  Highly  desirable 
as  branches  may  be,  they  are  almost  certain  to  follow  earlier  de- 
velopments of  business,  proceeding  step  by  step  from  the  first  ten- 
tative efforts  to  more  serious  attempts  to  take  advantage  of  oppor- 
tunities as  they  have  developed,  employing  first  one  kind  of  effort 
and  then  one  more  elaborate,  until  the  point  is  reached  when  the 
establishment  of  the  manufacturer's  own  branch  becomes  desir- 
able. Such  a  manufacturer  will  by  that  time  have  gained  all  the 
information  necessary  as  to  the  form  of  organization  which  he 
prefers  and  the  conditions  under  which  such  an  organization  can 
be  planted  in  a  given  foreign  country.  It  may  here  be  pointed 
out,  however,  that  establishing  one's  self  in  a  foreign  city  in- 
volves compliance  with  foreign  laws  and  regulations,  the  secur- 
ing of  necessary  licenses,  the  payment  of  prescribed  taxes,  etc. 
An  American  cannot  simply  sit  down  in  a  foreign  city 
and  start  doing  business  without  reference  to  the  local  authori- 
ties, 

American  Employees  in  Foreign  Branches. — It  is  often  re- 
marked that  Americans  do  not  care  to  expatriate  themselves, 
that  American  representatives  are  averse  to  establishing  them- 
selves permanently,  even  in  the  most  attractive  foreign  coun- 
tries, and  that  in  the  Orient  and  in  Latin  America  representa- 
tives are  too  apt  to  "go  to  the  bad."  Our  manufacturers  who 
contemplate  establishing  branches  in  foreign  countries  will  have 
to  take  such  conditions  into  consideration  and  plan  wisely  and 
well  for  the  organization  of  their  branches  as  affecting  the  life 
and  happiness  of  their  employees  whom  they  may  send  from 
home.  In  many  countries  they  will  have  to  remember  the  high 
cost  of  living.  As  a  rule,  both  Germans  and  Englishmen  go  into 
commerce  in  a  colony  or  foreign  country  not  with  the  idea  of 
ending  their  days  there,  but  to  spend  a  period  of  years,  ulti- 
mately returning  "home"  to  spend  in  ease  profits  they  have 
accumulated  or  to  take  a  commanding  position  in  the  home  com- 
merce with  the  market  they  have  studied  thoroughly.  English 
employees  of  great  companies  who  are  sent  to  India,  East  or 
West  Africa  and  the  Orient,  are  granted  periodical  leaves  of  ab- 
sence— are,  for  example,  permitted  to  return  home  once  every 


316  PRACTICAL  EXPORTING 

three  years  for  six  months'  vacation  on  full  salary,  or  once  in 
seven  years  for  a  whole  year's  vacation. 

Then,  too,  foreign  branches  of  European  banks  and  large  com- 
mercial houses  often  supply  living  quarters  as  homes  for  their 
employees  abroad  or  establish  clubs  for  the  young  men  sent  out 
from  home,  to  protect  them  both  against  high  local  living  ex- 
penses and  against  the  temptations  of  life  in  a  strange  and  lonely 
country.  Such  efforts  as  these  must  also  be  adopted  by  Amer- 
icans if  we  are  to  follow  to  its  satisfactory  development  the 
scheme  of  foreign  branches,  beyond  any  doubt  highly  desirable 
when  intelligently  contemplated  and  wisely  carried  out. 


CHAPTER  X 

THE. EXPORT  ORDER 

What  Samples  Mean  in  the  Export  Trade  and  How  They 
Should  be  Treated — Ways  of  Quoting  Prices  and  Discounts — 
Meaning  and  Attractiveness  of  C.I.F.  Prices — Terms  of  Sale 
Customary  or  Advisable  in  Export  Business — Foreign  Credit 
Ratings  and  Responsibility  of  Customers — Acceptance  or  Re- 
fusal of  Orders — The  Manufacture  of  Goods  for  Export  Ship- 
ment. 

ACTUAL  experience  in  handling  export  business  begins 
with  the  receipt  of  an  order  for  foreign  shipment.  If 
that  order  arrives  bearing  a  foreign  postage  stamp  the 
manufacturer  must  not  immediately  be  hypnotized  and  dream 
that  the  whole  world  has  been  conquered.  It  has  already  and 
more  than  once  been  remarked  that  one  order  is  only  a  clue  to 
many  more  and  larger  ones  which  ought  to  be  secured.  A  manu- 
facturer cannot  get  them  unless  each  individual  order  is  handled 
in  the  right  way.  Excuses  and  apologies  lose  whatever  savor 
they  may  have  here  at  home  when  they  travel  the  oceans  for 
three  or  four  weeks;  their  originality,  brilliancy  and  adroitness 
evaporate  as  they  wander  over  10,000  or  15,000  miles  of  the 
surface  of  the  globe. 

If  the  order  comes  from  an  American  export  commission  house 
it  is  not  a  domestic  order.  But  in  this  case,  if  the  manufac- 
turer is  disposed  so  to  regard  it,  the  nominal  buyer,  the  export 
house  acting  as  agent  for  the  acutal  buyer,  is  at  hand  and  close 
at  hand  to  remind  the  manufacturer  of  the  real  state  of  affairs. 

All  export  orders  require  a  manufacturer's  best  thought  and 
effort  if  they  are  w^orth  accepting.  One  is  nothing.  It  is  only 
the  many  that  count.  One  is  not  worth  having  unless  the  many 
are  sought.  It  is  trite  to  remind  Americans  that  export  trade 
cannot  be  taken  up  and  laid  aside  as  one's  summer  vacation  or 
the  pressure  of  domestic  trade  may  suggest,  that  effort  and  per- 

317 


318  PRACTICAL  EXPORTING 

formance  must  be  consistent.  The  mere  statement  of  this 
axiom  ought  to  be  enough  for  the  thinking  man,  and  no  other 
gets  or  deserves  to  get  export  success. 

The  necessity  for  especially  prompt  attention  to  export  orders 
and  their  execution  and  despatch  will  be  emphasized  when  the 
time  necessarily  occupied  in  the  completion  of  a  transaction  is 
remembered.  Note  the  date  of  an  order  and  the  date  of  its  re- 
ceipt. Calculate  the  shortest  possible  time  in  which  it  can  be 
filled.  Inquire  when  the  first  available  steamer  thereafter  sails 
for  port  of  destination  and  how  long  the  goods  will  be  in  transit. 
Remember  that  at  some  custom-houses  particularly  in  South 
America,  thirty  days  at  least  will  be  required  to  clear  goods 
after  arrival.  The  result  in  time  of  this  accumulation  of  delays 
is  likely  to  be  impressive.  Furthermore  if  a  steamer  is  missed, 
perhaps  there  may  not  be  another  for  the  same  port  for  two 
w^eeks  or  a  month. 

SAMPLES  IN  THE  EXPORT  TRADE 

Most  orders,  whether  foreign  or  domestic,  originate  in  the  sam- 
ple. It  may  be  a  little  thing  of  smallest  intrinsic  value,  pre- 
sented in  the  act  of  soliciting  an  order;  it  may  be  a  great  power 
plant  installed  in  some  locality  accessible  to  the  buyer;  it  may 
be  one's  customer's  own  last  shipment  of  goods  which  he  likes. 
Whatever  it  is,  the  sample  is  more  than  an  important,  it  is  a 
vital  element  in  export  success. 

Sample  Offers. — ^Manufacturers  of  goods  which  can  be  repre- 
sented by  samples  easily  or  cheaply  submitted  often  advertise 
their  willingness  to  submit  such  sami)les  free  of  charge  in  their 
announcements  to  the  foreign  trade  or  in  circular  letters;  but 
"sample  collectors"  abound  everywhere,  even  here  in  the  United 
States. 

In  personal,  specially  addressed  letters  to  carefully  chosen 
prospects  a  sample  offer  may  be  quite  another  matter.  Probably 
there  is  not  nearly  enough  done  in  this  direction.  If  there 
were,  a  certain  great  South  American  department  store,  the 
largest  in  that  continent,  would  probably  easily  be  able  to  supply 
its  equivalent  of  American  5-and-lO-cent  counters  with  perennial 
stocks,  quite  without  cost.  It  is  certainly  as  undesirable  hold- 
ing one's  samples  too  cheaply  as  clinging  too  tightly  to  them. 


TEE  EXPORT  ORDER  319 

But  the  same  manufacturer  who,  here  at  home,  bombards  desir- 
able customers  with  samples  very  likely  decliues  to  send  abroad  so 
much  as  a  tin  dipper,  unless  against  "cash  with  order."  What 
equitable  arrangement  can  be  made?  Evidently  enough,  for- 
eign customers  will  insist  upon  knowing  what  the  goods  they 
wish  to  order  are  like. 

In  our  consideration  of  export  advertising  we  have  referred 
briefly  to  the  policy  of  offering  sample  assortments.  However, 
the  assortments  selected  and  proposed  by  the  manufacturer  him- 
self may  not  be  the  choice  of  his  prospective  customer,  may  in- 
clude items  unsalable  to  his  particular  trade.  He  may  prefer 
to  have  quantities  or  samples  only  of  two  or  three  when  a  dozen 
different  articles  or  sizes  have  been  offered.  The  sample  assort- 
ment does  not  as  a  rule  appeal  very  convincingly  to  the  best 
class  of  foreign  buyers. 

Sample  Discounts. — Manufacturers,  in  their  home  trade,  in 
many  instances  sell  the  samples  which  have  been  used  by  travel- 
ing salcvsmen  at  a  considerable  discount  from  the  original  prices. 
In  the  foreign  trade  samples  are  usually  made  for  specific  pur- 
poses, or  certain  customers.  When  so  made  they  may  be  re- 
garded by  the  manufacturer  as  different  in  some  respects  from 
the  sample  ranges  supplied  to  his  domestic  traveling  men,  and 
possibly  therefore  not  subject  to  discount  when  sold.  Yet  it  is 
worth  while  bearing  in  mind  the  cost  of  getting  any  new  busi- 
ness, and  usuallj^  the  much  lower  cost  of  getting  foreign  than  do- 
mestic business. 

Therefore  it  seems  in  some  cases  logical  and  just  that  a  spe- 
cially favorable  price  on  samples  should  be  offered  to  foreign 
prospects  who  seem  to  be  of  the  right  caliber  and  who*  express  a 
genuine  interest  in  the  goods.  If  such  special  price  offers  are 
made  they  should  not  be  apparently  advantageous  only.  There 
should  be  a  g-enuine  reduction.  An  offer  of  "80  per  cent,  off" 
may  seem  a  remarkably  liberal  one,  until  the  prospect,  examin- 
ing the  manufacturer's  quotations,  observes  that  80  per  cent,  is 
the  discount  applying  to  any  and  all  orders.  The  prospect 
may  then  perhaps  experience  an  unfavorable  re^iilsion  of  feeling. 

It  may  be  added  that  it  is  wise  to  beware  of  the  expression 
"Sample  Order"  used  by  some  foreign  buyers,  especially  in  cer- 
tain localities,  only  for  the  purpose  of  securing  special  discounts 


320  PRACTICAL  EXPORTING 

or  other  advantages.  It  not  always  means  what  the  words 
usually  imply. 

Samples  on  Consignment. — It  has  sometimes  seemed  to  manu- 
facturers a  good  plan  to  send  samples  without  solicitation,  or 
even  without  permission,  to  every  large  house  abroad  whose 
trade  is  especially  sought.  This  practice,  however,  is  open  to  the 
general  criticism  applying  to  any  free  gift — and  to  several 
others.  The  thing  which  is  not  requested  and  which  costs  no 
money  seldom  carries  great  influence  with  it.  If  the  sample  has 
any  value  to  speak  of,  the  prospect  will  have  to  pay  import  duty 
before  it  passes  his  custom  house,  and  may  even  have  to  pay  fees 
of  a  custom  house  broker  to  get  it  through.  In  such  cases  the 
unsolicited  sample  may  never  reach  the  prospect. 

Accordingly  the  plan  has  been  adopted  by  some  manufac- 
turers of  making  especially  desirable  foreign  houses  small  con- 
signments of  new  goods,  after  requesting  and  receiving  permis- 
sion to  do  so.  A  manufacturer  adopting  this  plan  is  likely  to 
propose  the  consignment  to  the  foreign  prospect  in  advising  that 
it  is  the  manufacturer's  firm  expectation  that  the  sample  con- 
signment, at  least,  can  be  sold  with  profit.  In  that  case  only  the 
quoted  prices  are  to  be  accepted.  If  it  turns  out  that  the  con- 
signment can  only  be  sold  at  a  loss,  the  prospect  is  asked  to  de- 
duct costs  and  his  usual  percentage  of  profit,  and  at  his  con- 
venience remit  whatever  may  be  left.  If  the  utterly  unprece- 
dented should  happen  and  the  goods  prove  not  to  be  salable  at  all 
at  any  price,  then  the  prospect  is  advised  that  it  is  not  worth 
while  returning  the  goods  to  the  United  States,  but  that  he  is  at 
liberty  to  throw  them  away,  charge  back  to  the  manufacturer 
the  duties  paid  and  other  expenses,  for  which  prompt  remittance 
will  be  made,  and  all  concerned  will  give  up  the  effort  to  develop 
a  mutually  profitable  business. 

The  privilege  of  making  such  sample  consignments  is  some- 
times eagerly  solicited.  The  propriety  of  making  one  before  a 
prospect  has  signified  his  willingness  to  accept  it  is  more  than 
doubtful.  A  manufacturer  must  be  prepared  to  find  some  pros- 
pects refusing  to  have  anything  to  do  with  shipments  so  made. 
Large  importers  are  not  often  so  eager  to  receive  consignments 
as  manufacturers  are  to  ship  thom. 

Samples  Must  Represent  Goods. — Among  the  most  important 


THE  EXPORT  ORDER  321 

of  all  lessons  for  the  exporting  manufacturer  is  this :  his  samples 
must  represent  his  goods.  The  practice  has  grown  up  here  in 
the  United  States  of  making  samples  rather  better  than  the 
goods.  Most  American  buyers  are  accustomed  so  to  regard  sam- 
ples, and  instinctively  discount  appearance  or  quality  as  experi- 
ence has  taught  them  is  necessary,  just  as  they  are  accustomed  to 
discount  the  boastfulness  of  our  salesmen.  In  many  cases  our 
samples  for  home  use  are  designedly  made  superior  to  the  goods 
which  will  actually  be  supplied,  sometimes,  for  example,  be- 
cause it  is  believed  that  long  use  "on  the  road"  will  result  in 
wear  or  deterioration.  Similar  practices  will  not  be  satisfactory 
in  foreign  business.  Foreign  buyers  are  accustomed  to  consider 
a  sample  as  a  sample.  There  is  prettj^  sure  to  be  no  end  of 
trouble  if  the  goods  delivered  are  materially  unlike  or  unequal 
to  the  sample  on  the  basis  of  which  the  foreign  customer  has 
placed  his  order. 

When  the  manufacturer  or  his  salesman  sells  goods  face  to 
face  with  a  customer,  if  there  is  likely  to  be  variation  in  the 
goods  to  be  delivered,  this  possibility  should  be  clearly  explained 
to  and  thoroughly  understood  by  the  customer.  For  instance, 
in  many  articles  of  cheap  colored  leather,  cheap  shoes,  ladies' 
hand  bags  and  belts  of  the  cheaper  class,  it  is  not  possible  to  en- 
sure uniform  coloring.  Great  dissatisfaction  is  certain  to  follow 
unless  buyers  clearly  understand  this  fact  and  are  prepared  to 
take  their  chances  of  the  ultimate  salability  of  the  goods  that  will 
be  delivered.  It  is  far  better  to  have  a  thorough  understanding 
on  this  score  before  the  goods  are  made  and  shipped,  even  at  the 
cost  of  an  occasional  loss  of  an  order,  than  it  is  to  have  com- 
plaints, claims  and  quarrels  follow.  Usually  in  this  case  it  is 
easy  for  the  salesman  to  couple  with  his  explanation  of  what  is 
to  be  expected  and  the  reasons  therefor,  effective  arguments  for 
a  trial  order  on  the  basis  of  the  experience  in  actually  handling 
the  goods  on  the  part  of  large  merchants  in  foreign  markets, 
possibly  in  a  market  near  that  of  the  prospect. 

Goods  Must  Equal  Sample. — Conversely,  it  may  be  here  re- 
marked, although  with  equal  logic  coming  later  in  these  pages, 
that  export  goods  must  invariably  be  manufactured  "up  to  the 
sample."  This  follows  not  alone  because  one's  foreign  cus- 
tomers expect  it  and  because  it  is  good  policy  to  do  so,  but  be- 


322  PRACTICAL  EXPORTING 

cause  unless  it  is  done  the  complaining  foreign  customer  will 
usually  have  legal  support  in  lodging  a  claim  for  damages. 

Owing  to  the  predominant  position  of  Great  Britain  in  the 
trade  of  the  world  for  scores  of  years,  British  practices  have  been 
widely  adopted,  not  only  in  the  British  colonies  but  in  many 
other  important  countries.  The  British  "Sale  of  Goods  Act  of 
1893"  still  applies  in  a  great  many  markets  besides  those  of 
Great  Britain.  It  provides:  "In  the  case  of  a  contract  for 
sale  by  sample  there  is  an  implied  understanding:  (1)  That 
the  bulk  shall  correspond  with  the  sample  in  quality;  (2)  That 
the  buyer  shall  have  a  reasonable  opportunity  of  comparing  the 
bulk  with  the  sample;  (3)  That  the  goods  shall  be  free  from  any 
defect  rendering  them  unmerchantable,  which  would  not  be  ap- 
parent on  reasonable  examination  of  the  sample." 

Similar  conditions  are  often  part  of  the  formal  contracts  on 
which  large  transactions  in  international  trade  are  founded.  In 
any  event,  since  it  is  the  law  of  the  place  of  residence  of  the  cus- 
tomer to  which  the  seller  is  subject,  it  is  clear  that  sellers  will 
be  wise  in  avoiding  every  possible  legitimate  ground  for  claim  in 
this  regard.  Foreign  buyers  exi^eet  sellers  to  guarantee  that 
goods  delivered  shall  be  fully  equal  to  sample.  In  the  piece 
goods  trade  buyers  retain  for  comparison  small  clippings  of  the 
original  samples  or  patterns  which  have  been  shown  tliem,  from 
which  they  have  ordered  the  goods.  In  buying  oils  and  chem- 
icals samples  may  be  retained  for  analysis  and  comparison  with 
shipments  utimately  received. 

Moreover  the  policy  of  so  doing  must  commend  itself  to  manu- 
facturers if  they  will  rid  themselves  of  our  local  ideas,  and  will 
remember  that  things  are  not  always  done  in  other  countries  as 
they  are  done  in  the  United  States. 

QUOTING  PRICES 

"Any  merchant  in  Latin  America,  be  he  big  or  small,  worthy 
of  extended  credit  or  on  the  verge  of  bankruptcy,  can  write  to 
almost  any  American  manufacturer  and  be  quoted  the  lowest 
export  prices  for  his  product,  down  to  the  la.sf  cash  discount; 
catalogues  are  sent  abroad  indiscriminately,  even  to  individual 
consumers  showing  the  exact  prices  at  which  the  largest  jobbers 
can  purchase  the  articles  advertised. ' ' 


TEE  EXPORT  ORDER  323 

This  quotation  from  a  man  long  engaged  in  the  export  com- 
mission business  will  remind  the  reader  of  some  aspects  of  the 
price  question  which  have  already  been  remarked.  If  we  have 
now  to  consider  other  features  it  is  worth  renewing  emphasis  on 
the  generally  bad  principle  in  export  trade  of  "one  price  to  all." 
The  manufacturer  may  find  that  there  are  export  commission 
houses  to  be  taken  care  of,  sometimes  commissions  to  local  agents, 
sometimes  profits  of  a  local  wholesale  distributor  to  be  looked 
out  for.  There  is  no  greater  mistake  than  that  of  fancying  all 
houses  of  one  and  the  same  caliber,  just  because  they  are  foreign. 

Furthermore  it  is  to  be  remembered  that  it  is  utterly  impossi- 
ble usually  to  dictate  prices  of  re-sale  in  foreign  countries.  In 
addition  to  ocean  freight  and  custom-house  duties  there  are 
often  charges  unsuspected  by  us,  dock  dues,  fluctuations  in  for- 
eign currencies,  gratuities  and  exorbitant  fees  to  custom-house 
brokers  and  officials,  and  a  cost  of  doing  business  three  or  four 
times  that  to  which  we  are  accustomed. 

How  Prices  May  Be  Varied. — To  obtain  greater  facility  in 
quoting  varied  prices  as  occasion  may  seem  to  demand,  many  of 
our  manufacturers  who  make  net  prices  to  the  home  trade  estab- 
lish quite  another  list  for  export,  quoting  from  it  sundry  dis- 
counts, ranging  for  example  from  10  per  cent,  to  40  per  cent, 
according  to  circumstances. 

Another  plan  adopted  by  some  American  manufacturers  is 
that  of  varying  discounts  according  to  quantities  purchased. 
This  is  by  no  means  characteristic  only  of  export,  it  is  done  often 
enough  in  domestic  business.  A  variation  of  this  practice  has 
also  been  made  to  do  duty  effectively  in  foreign  trade — regular 
discounts  are  quoted  and  paid  but  rebates  are  granted  at  the 
end  of  a  year's  trading,  based  on  the  total  quantity  of  goods  pur- 
chased during  the  twelvemonth.  It  must  be  acknowledged,  how- 
ever, that  in  both  of  these  practices  a  number  of  obstacles  are 
likely  to  present  themselves  in  export  relations  to  circumvent 
which  will  often  require  the  exercise  of  a  good  deal  of  ingenuity. 
Complications  introduced  by  agents,  jobbers,  export  commission 
houses,  and  otherwise,  indicate  that  the  beginner  at  exporting 
would  do  well  to  defer  an  attempt  to  establish  quantity  dis- 
counts, especially  annual  rebates,  until  his  wares  have  been  thor- 
oughly well  established  in  foreign  markets. 


324  PRACTICAL  EXPORTING 

Prices  are  often  varied  according  to  territory.  This  happens 
sometimes  here  at  home,  and  the  principle  may  be  extended  as 
circumstances  or  competition  may  seem  to  suggest.  An  Amer- 
ican salesman  traveling  from  Boston  very  likely  gets  10  per 
cent,  higher  prices  for  the  goods  he  sells  to  scattered  settlers, 
costly  to  drum,  in  Arizona  and  New  Mexico  than  he  has  the 
courage  to  ask  from  customers  in  Ohio,  who  buy  a  much  larger 
volume.  But  possibly  a  manufacturer  of  aluminum  goods,  quot- 
ing 60  per  cent,  discount  in  the  Eastern  States  may  quote  only  55 
per  cent,  in  our  Northwestern  Pacific  States.  Perhaps  on  in- 
quiring it  will  be  found  that  in  the  Eastern  States  he  is  selling 
through  his  own  salesman,  at  an  average  expense  of  5  per  cent., 
while  on  the  Pacific  Slope  he  is  giving  10  per  cent,  to  a  commis- 
sion salesman.     His  export  prices  may  be  similarly  arranged. 

What  Discounts  to  Name. — In  principle,  our  American  cash 
discount  ought  never  to  be  quoted  in  foreign  business,  certainly 
never  unless  the  foreign  customer  actually  places  cash  in  this 
country  for  the  payment  of  his  goods  before  they  are  shipped. 
If  any  cash  discount  is  ever  made  it  should  be  a  large  one,  or 
should  be  varied  according  to  the  country  for  which  it  is  quoted. 
Two  per  cent,  may  appeal  to  buyers  in  Europe.  It  is  not  so 
likely  to  appeal  to  a  buyer  in  Colombia  where  the  interest  rate  on 
money  runs  as  high  as  18  per  cent,  per  annum. 

The  practice  common  in  a  good  many  trades  at  home  of  mak- 
ing a  series  of  complicated  discounts  should  certainly  be  avoided 
in  the  export  trade.  Some  hardware  buyers  in  other  countries 
may  understand  "66%  per  cent.,  16%  per  cent.,  121/2  per  cent., 
5  per  cent,  and  5  per  cent."  but  such  a  quotation  would  be  a 
Chinese  puzzle  to  most  importers  contemplating  doing  business 
with  us.  Even  in  those  trades  where  the  quotation  of  such  dis- 
counts is  so  firmly  established  and  so  old  a  practice  that  it  can- 
not be  eliminated,  care  should  be  taken  in  deducting  these  dis- 
counts when  export  invoices  are  prepared.  The  operations  of 
deducting  each  percentage  should  be  clearly  indicated.  There 
ought  never  to  be  any  such  invoices,  for  some  way  should  in 
every  case  be  found  cf  avoiding  similar  quotations. 

Quoting  in  Foreign  Moneys. — It  is  perhaps  characteristic  of 
American  patriotism  that  so  much  talk  is  heard  regarding  the 
supremacy  of  the  United  States  dollar.     Germany  has  never  at- 


TEE  EXPORT  ORDER  325 

tempted  to  impose  tlie  mark,  or  France  the  franc,  on  unwilling 
foreign  customers  or  in  any  cases  excepting  where  available 
banking  facilities  have  made  marks  and  francs  a  cheaper  or  a 
more  desirable  medium  than  the  pound  sterling.  The  principle 
to  be  adopted  by  a  shrewd,  ambitious  business  man  would  seem 
to  be  that  of  making  prices  in  such  currencies  as  his  customers 
prefer,  providing  there  is  no  loss  of  profit  in  so  doing. 

Quite  often,  in  normal  times,  there  has  been  an  actual  loss  in 
attempting  to  do  business  in  dollars  and  cents,  where  there  might 
be  an  extra  profit  in  using  pounds,  shilling  and  pence.  This  does 
not  imply  any  difficult  problem  for  the  manufacturer  to  solve. 
If  there  were  a  problem  and  it  were  a  difficult  problem,  it  would 
still  be  worth  his  while  studying  it  if  thereby  larger  profits 
might  become  possible.  In  a  later  chapter  we  shall  come  to  a 
detailed  examination  of  problems  involved  in  using  foreign  cur- 
rencies. Meanwhile,  it  should  be  noted  that  if  prices  are  made 
in  other  than  American  money,  ample  allowance  should  be  made 
in  the  rate  at  which  conversion  is  efit'ected  for  all  possible  fluctu- 
ations in  exchange,  and  in  no  instance,  excepting  only  where  the 
manufacturer  has  his  own  branch  establishment  on  the  ground, 
should  quotations  ever  be  made  in  the  currencies  of  countries  on 
a  silver  or  paper  basis.  The  American  gold  dollar,  the  pound 
sterling,  or  the  French  gold  franc  should  be  specified  in  all  such 
instances. 

Undoubtedly  most  American  manufacturers  quote  their  prices 
in  dollars.  When  exchanges  are  badly  disorganized  no  other 
course  is  possible.  It  is  often,  however,  in  normal  times,  believed 
desirable  by  manufacturers  or  it  is  requested  by  their  foreign  cus- 
tomers that  total  invoice  values  be  collected,  however  collection 
is  made,  in  the  currency  of  their  country  or  one  of  the  other 
great  international  currencies.  In  such  cases  manufacturers 
should  propose  that  invoice  totals  shall  be  converted  into  the  de- 
sired currency  at  the  day's  rate  of  exchange  ruling  in  New  York 
when  the  shipment  is  made.  Should  this  seem  to  an  inexperi- 
enced importer  abroad  to  involve  an  unknown  quantity,  it  may 
be  explained  to  him  that  all  the  manufacturer  seeks  is  to  obtain 
the  exact  equivalent  in  dollars  of  the  prices  which  he  has  quoted 
and  which  have  been  found  to  be  satisfactory,  and  because  of 
daily  fluctuations  in  the  exchange  market  it  is  impossible  for  him 


326  PRACTICAL  EXPORTING 

to  name  a  fixed  rate,  unless  he  names  one  so  high  as  to  cover  all 
contingencies,  very  likely  working  most  clisaclvantageously  to 
the  customer. 

Quotation  Forms. — It  is  an  excellent  plan  to  have  a  detailed 
and  comprehensive  printed  form,  on  which  quotations,  either 
general  or  special,  shall  be  submitted.  Such  a  form,  in  addition 
to  the  repetition  of  descriptions  and  quotation  of  prices,  should 
specifically  and  clearly  indicate  at  least  the  following:  where  de- 
livery of  goods  will  be  made ;  what  packing  will  be  supplied  as 
included  in  the  prices  named;  approximate  time  after  receipt  of 
order  when  shipment  can  be  expected ;  what  liabilities  only  are 
assumed  by  the  manufacturer ;  what,  in  a  general  way,  at  least, 
must  be  assumed  by  the  buyer;  exemption  of  manufacturer  from 
liability  in  case  of  strikes  or  causes  beyond  his  control;  what 
form  of  marine  insurance  will  be  supplied  in  the  absence  of  spe- 
cific instructions  from  buyers ;  definite  terms  of  payment,  clearly 
explained. 

In  addition  each  item  in  a  quotation  sheet  should  be  given  a 
code  word  for  use  in  a  possible  exchange  of  cablegrams  referring 
to  that  item.  Each  special  quotation  should  be  signed  and  in  a 
formal  manner  by  a  member  of  the  firm  or  an  official  of  the  com- 
pany authorized  to  affix  the  company's  signature.  Quotations 
should  be  made  to  hold  good  for  a  certain  named  length  of  time, 
or  otherwise  "until  withdrawn,"  and  in  the  export  business 
withdrawal  should  only  be  calculated  from  the  date  of  receipt 
by  the  customers  of  new  quotations.  Prices  "subject  to  change 
without  notice"  will  not  be  found  a  satisfactorj^  means  of  de- 
veloping any  large  export  relations,  excepting  only  in  trades 
where  cable  inquiries  and  orders  are  the  custom. 

With  such  quotation  forms  it  is  well  to  enclose  an  emphatic 
reminder  to  customers  or  prospects  that  when  orders  are  placed 
specific  instructions  must  be  given  whenever  special  packing, 
special  shipping  routes,  or  any  peculiar  requirements  are  to  be 
followed.  The  manufacturer's  correspondents  in  countries 
where  consular  invoices  are  necessary,  should  be  reminded  that 
unless  specific  instructions  are  given  by  buyers  as  to  the  descrip- 
tions and  classifications  according  to  which  the  goods  are  to  be 
manifested,  the  manufacturer  or  shipper  can  only  follow  his  own 
best  judgment,  and  will  not  hold  himself  responsible  for  any  fine 


TEE  EXPORT  ORDER  327 

that  may  result  from  errors.  The  principle  involved  in  prac- 
tices such  as  these  is,  it  will  be  observed,  the  same  as  that  already 
laid  down ;  absolute  exactness  and  general  formality  in  business 
dealings  with  foreign  countries. 

Where  Goods  Are  Delivered. — There  has  sprung  up  a  mis- 
taken and  unfortunate  use  of  the  symbol  F.O.B.,  meaning  "free 
on  board."  In  the  export  trade  F.O.B.  ought  to  mean  that 
the  price  of  the  goods  includes  all  charges,  packing,  railroad 
freight,  lighterage,  storage  and  dock  dues,  if  any,  etc.,  up  to  and 
including  the  placing  of  the  goods  on  board  an  outgoing  ocean 
vessel.  The  term  ought  never  to  be  used  with  any  other  signifi- 
cation. In  the  United  States  it  is  sometimes  used  rather  loosel3^ 
American  manufacturers  quote  "F.O.B.  Factory"  when  they 
mean  placed  free  on  railroad  cars.  They  often  quote  "F.O.B. 
New  York"  when  they  intend  only  to  imply  that  inland  freight 
charges  will  be  prepaid  to  New  York  but  that  cartage  or  light- 
erage after  arrival  in  New  York  wall  be  for  account  of  the  buyer. 
There  is  great  need  of  reform  here.  Properly,  in  export  trade 
F.O.B.  ought  to  mean  "F.O.B.  Vessel,"  as  is  the  European 
custom.^ 

It  should  be  noted  that  there  is  a  distinction  between  "F.O.B." 
and  "F.A.S."  (free  alongside).  When  quotations  are  nrade 
F.O.B.,  that  does  not  of  course  imply  that  the  shipper  himself 
perform.s  the  physical  labor  of  actually  placing  the  goods  on 
board  vessel.  He  only  delivers  them  at  the  dock  within  the 
reach  of  the  ship's  tackle  or  to  be  handled  by  the  ship's  steve- 
dores, the  charges  for  which  are  absorbed  in  the  freight  rate 
paid.  However,  ship's  tackle  is  not  always  strong  enough  to 
handle  exceptionally  large  and  heavy  packages  (for  example, 
boilers,  locomotives,  threshing  machines  and  engines,  some  auto- 
mobiles) and  they  should  be  quoted  F.A.S.  "free  alongside,"  un- 
less the  shipper  is  himself  prepared  to  pay  additional  charges  for 
special  derricks,  etc.,  that  are  required  in  putting  unusually 
heaiy  packages  into  the  hold  or  on  the  deck  of  the  ves.sel. 

Most  freight  steamers  can  hoist  weights  of  up  to  two  tons  with 
their  own  tackle.  The  freight  rates  they  quote  usually  include 
such  charges.  Some  small  steamers  cannot  hoist  more  than  one 
ton.     Other  more  modern  boats  can  handle  as  much  as  three 

1  Official  American  definitions  may  be  had  from  National  Foreign  Trade 
Council,  India  House,  Hanover  Square,  New  York. 


328  PRACTICAL  EXPORTING 

tons  or  even  five  tons.  Whenever  packages  in  excess  of  weights 
which  the  ship's  tackle  can  safely  hoist  are  to  be  shipped,  spe- 
cial arrangements  have  to  be  made  by  the  shipper,  or  by  some 
one  on  his  behalf,  usually  involving  the  rental  of  a  floating  der- 
rick, which  may  cost  as  much  as  $25  an  hour  from  the  tim«  it 
leaves  its  station  until  its  return.  An  "F.O.B,  Vessel"  quota- 
tion involves  payment  of  these  hoisting  charges  when  they  are  re- 
quired. "F.A.S.  Vessel"  excludes  them.  But  F.A.S.  is  never 
quoted  except  as  applying  to  shipments  for  which  extra  loading 
charges  may  be  imposed,  heavy  weights,  bulk  grain,  coal,  etc. 

Exceptionally  reasonable  rates  applying  to  heavy  packages  are 
made  by  some  steamship  lines  from  New  York  transshipping 
cargo  through  the  Panama  Canal  to  the  "West  Coast  of  South 
America.  Pieces  and  packages  exceeding  4,000  pounds  in 
weight,  were,  when  freights  were  stable,  subject  to  the  following 
charges  by  the  lines  in  question,  in  addition  to  the  regular  freight 
rates  but  including  hoisting  charges : 

If  Freighted  at  If  Freighted 

Weight                                                    ^leasurement  at  Weight 

Over    2  to    4  tons $0.09  per  cubic  foot  $.27  per  100  lbs. 

Over    4  to    5  tons 13  per  cubic  foot  .36  per  100  lbs. 

Over    5  to     6  tons 18  per  cubic  foot  .45  per  100  lbs. 

Over     6  to    7  tons 22  per  cubic  foot  .54  per  100  lbs. 

Over    7  to    8  tons 27  per  cubic  foot  .63  per  100  lbs. 

Over     8  to    9  tons 31  per  cubic  foot  .72  per  100  lbs. 

Over    9  to  10  tons 36  per  cubic  foot  .81  per  100  lbs. 

Over  10  to  11  tons 40  per  cubic  foot  .90  per  100  lbs. 

Over  11  to  12  tons 45  per  cubic  foot  .99  per  100  lbs. 

Under  no  circumstances  should  quotations  be  made  F.O.B.  for- 
eign point  of  destination,  unless  the  shipper  is  prepared  to  un- 
dertake the  payment  of  duties,  dock  charges  or  quay  dues,  and 
other  incidentals  at  such  destination.  ''F.O.B.  Destination" 
includes  all  these  items.  It  is  a  radically  different  quotation 
from  the  familiar  "C.I.F.,"  which  we  have  next  to  consider. 

ATTRACTIVENESS  OF  "C.I.F."  PRICES 

The  growth  of  the  practice  of  quoting  C.I.F.  terms  dates  back 
only  thirty  or  forty  years.  Half  a  century  ago  all  export  goods 
from  Europe  as  well  as  from  the  ITnited  States  were  sold  on 
"F.O.B.  Factory"  terms.    With  the  extraordinary  growth  of 


THE  EXPORT  ORDER  329 

international  trade  and  constantly  increasing  foreign  competi- 
tion, C.l.F.  terms  became  common,  while  in  late  years  quota- 
tions "Franco  Domicile,"  or  in  the  French  plirase  "Rendu 
Franco,"  are  becoming  more  and  more  common,  especially  among 
British  exporters,  and  very  generally  are  demanded  in  France 
by  many  importers — practically  by  all  in  French  towns  outside 
of  Paris. 

There  is  an  obviously  convincing  quality  about  C.l.F.  (often 
pronounced  "sift"")  prices,  which  include  those  elements  in  the 
cost  of  the  goods  about  which  the  foreign  prospect  knows  noth- 
ing, at  which  he  can  only  guess  in  an  indefinite  sort  of  a  way. 
They  also  eliminate  the  question  of  complicated  discounts.  The 
difficulties  in  the  way  of  naming  C.l.F.  prices  are  not  great,  and 
it  is  noteworthy  that  a  very  large  part  of  the  business  of  export 
commission  houses  consists  of  orders  closed  on  this  basis.  Often, 
or  perhaps  usually,  it  results  that  the  manufacturer  or  shipper 
makes  larger  profits  in  so  doing  business,  but  on  the  other  hand 
he  has  assumed  certain  risks. 

During  periods  of  disorganized  ocean  shipping  and  rapid  and 
extraordinary  freight  rate  advances  with  frequent  and  ex- 
treme fluctuations  in  rates  for  marine  insurance,  etc.,  such  as  we 
have  known  during  the  War  in  Europe,  few  if  any  shippers  dare 
risk  C.l.F.  quotations. 

What  "C.l.F."  Includes.— The  symbols  "C.l.F."  translate 
Cost,  Insurance,  Freight.  Quotations  of  prices  thus  made  in- 
clude nothing  else.  A  price  C.l.F.  does  not  include  foreign  im- 
port duty  or  landing  charges,  the  cost  of  consular  invoices  when 
required  by  country  of  destination,  or  any  other  item  whatsoever 
save  those  specifically  included  in  the  symbol. 

The  cost  means,  of  course,  the  price  of  the  goods  F.O.B. 
steamer,  including  all  charges  up  to  that  point — the  initial  cost 
at  factory  with  railway  freight,  possibly  storage,  trucking  or 
lighterage  and  hoisting  charges  if  any. 

The  insurance  covers  the  charge  for  premium  on  a  marine  in- 
surance policy  effected  under  the  usual  terms  and  conditions  of 
the  trade  involved.  Ordinarily  a  "Free  of  Particular  Average" 
polic}^  is  deemed  sufficient,  but  in  view  of  possible  disagreements 
on  this  score  it  is  recommended  that  in  quoting  C.l.F.  prices 
there  be  included  a  statement  of  exactly  what  kind  of  marine  in- 


330  PRACTICAL  EXPORTING 

surance  policy  will  be  supplied ;  also,  in  times  of  international 
conflict,  whether  with  or  without  war  risk.  Unless  specified  to  the 
contrary,  war  risk,  when  conflict  between  belligerents  involves 
risk,  will  be  assumed  to  be  covered  as  an  indispensable  protection 
to  the  buyer. 

The  freight  included  in  C.I.F.  terms  covers  the  steamer's 
charges  to  port  of  destination  in  accordance  with  the  terms  of 
the  ocean  bill-of-lading.  It  should  be  noted  that  C.I.F.  prices 
are  seldom  made  other  than  to  port  of  destination.  The  charges 
at  such  port — discharge,  lighterage,  quay  dues,  stamps,  petties, 
porterage  and  numerous  others — are  well  known  to  and  easily 
calculated  by  the  buyers.  The  object  of  the  C.I.F,  quotation  is 
to  let  the  buyer  know  what  the  goods  will  cost  him  on  board 
vessel  at  his  port,  or  his  nearest  port. 

Responsibilities  Under  C.I.F.  Terms. — It  is  the  shipper's  and 
seller's  part  to  assume  the  risk  of  fluctuations  in  the  elements 
which  make  up  the  C.I.F.  prices.  He  must  speculate  on  the 
charges  for  putting  his  goods  on  board  vessel ;  his  is  the  risk  of 
possible  advances  in  marine  insurance  rates  or  ocean  freight 
charges,  no  matter  how  extreme,  sudden  or  unexpected.  On  this 
account  it  is  not  always  a  safe  practice  to  quote  C.I.F.  prices  to 
hold  good  for  an  indefinite  length  of  time.  Most  large  business 
on  these  terms  is  quoted  by  cable  for  immediate  cable  reply,  or 
such  reply  within  a  definite,  mutually  understood  number  of 
days.  C.I.F.  prices  are,  however,  often  (juoted  by  mail;  in 
such  case  they  may  be  held  open  for  immediate  mail  reply,  or 
for  prompt  cable  reply  only,  after  the  receipt  of  quotations. 

The  responsibility  of  the  seller  in  a  C.I.F.  sale  as  legally  con- 
sidered is  this:  delivery  is  made  to  the  buyer  at  the  shipping 
point,  the  carrier  is  an  agent  of  the  buyer  to  accept  the  goods 
on  the  latter 's  behalf.  The  seller  agrees  to  deliver  the  goods  on 
board  a  suitable  vessel  and  to  prepay,  for  buyer's  account,  the 
freight  charges  and  insurance  premium  or,  in  rare  cases,  to 
credit  those  charges  when  not  necessarily  prepaid.  The  seller 
is  not  concerned  with  the  actual  arrival  of  the  goods  at  destina- 
tion. The  buyer  must  pay  for  them  whether  they  arrive  or  not. 
If  they  have  been  lost  or  damaged  he  looks  to  the  carrier  or  the 
insurer  to  make  good  the  loss. 


THE  EXPORT  ORDER  331 

Variations  of  the  C.I.F.  expression  are  often  encountered. 
C.  &  F.  is  identically  the  same  sort  of  quotation  omitting  the  in- 
surance element  which  in  such  cases  is  taken  care  of  by  the 
buyer.  It  is  quite  wrong  to  fancy  these  terms  indicated  by 
writing  "C.A.F."  as  some  authorities  advise.  No  matter  what 
the  American  understanding  of  the  latter  expression  may  be,  it 
is  not  in  foreign  countries  interpreted  ''Cost  and  Freight." 
"C.A.F."  is  the  abbreviation  for  three  French  words  meaning 
precisely  the  same  as  our  C.I.F.,  the  French  word  for  insurance 
being  assurance.  When  the  cost  and  the  freight  only  are  in- 
cluded, that  term  should  be  abbreviated  "C.  &  F.,"  never  "C.A. 
F." 

"C.I.F.  &  E."  adds  to  the  usual  significance  of  C.I.F.  the 
element  of  exchange.  This  quotation  is  familiar  in  the  Australa- 
sian and  South  African  trades,  in  which,  as  we  shall  see  when 
we  come  to  the  subject  of  banking,  exchange  on  colonial  markets 
is  usually,  excepting  only  when  these  terms  have  been  made, 
reckoned  for  the  account  of  the  buyer.  In  quoting  C.I.F.  &  E., 
it  is  the  seller  who  takes  care  of  the  exchange.  C.I.F. I.  &  E. 
adds  the  further  element  of  interest,  often  much  the  same  thing 
as  exchange,  while  C.I.F.  &  C.  includes  commission. 

How  C.I.F.  Terms  Should  Be  Quoted. — It  is  by  all  means  wise 
in  making  C.I.F.  quotations  to  explain  precisely,  in  formal  fash- 
ion, the  relative  responsibilities  of  seller  and  buyer.'  This 
should,  preferably,  be  at  length  and  in  detail ;  if  nothing  more 
there  must  be  a  brief  explanation  and  warning.  A  large  New 
York  export  house  prints  the  following  on  its  quotation  and  in- 
voice forms : 

"The  seller  assumes  no  responsibility  aside  from  the  follow- 
ing: To  deliver  goods  F.O.B.  vessel  at  port  of  shipment;  to  ar- 
range for  the  freight,  paying  for  it  in  advance  if  necessary;  to 
cover  the  shipment  with  suitable  marine  insurance,  free  of  par- 
ticular average  under  the  terms  of  the  English  policy,  if  no  other 
conditions  are  particularly  agreed  upon.  These  terms  shall  not 
be  binding  on  shippers  in  case  of  force  majeure.'- 

"The  buyer  assumes  all  risks  of  the  voyage,  including  change 

1  See  Form  .3. 

2  For  definition  of  this  term  see  page  344. 


332  PRACTICAL  EXPORTING 

of  condition  or  deterioration  which  may  occur  on  account  of  the 
nature  of  the  goods.  The  ship's  bill  of  lading  in  the  usually 
accepted  form  shall  define  the  obligations  of  the  seller." 

How  C.I.F.  Prices  Are  Figured. — The  estimate  of  a  C.I.F. 
price,  in  normal  tnues  of  peace,  is  usually  an  easy  matter ;  in  any 
case  it  can  be  managed  by  the  exercise  of  a  little  ingenuity. 
The  manufacturer  seldom  has  any  difficulty  in  learning  exactly 
or  closely  approximating  the  cost  of  a  given  weight  of  his  goods 
delivered  on  board  steamer  at  port  of  shipment.  In  normal 
times  rates  of  marine  insurance  do  not  fluctuate  greatly  and 
seldom  make  a  very  important  item  in  the  total  charge,  ranging 
perhaps  from  Vj  per  cent,  to  1  per  cent,  according  to  circum- 
stances. Most  manufacturers  have  more  or  less  standard  sizes 
of  packing  cases  in  which  certain  known  quantities  of  various 
articles  are  packed.  It  is  an  easy  matter  to  ascertain  the  cubic 
measurements  and  the  gross  weights  of  such  packages,  or  to  esti- 
mate them  in  case  of  special  shipments.  Learning  by  inquiry 
the  approximate  ocean  freight  rate  that  will  have  to  be  paid,  the 
manufacturer  is  then  in  a  position  to  judge  very  closely  what 
the  ocean  freight  charge  on  a  given  quantity  of  goods  will  be. 

To  make  up  the  C.I.F.  cost  of  a  hundred  dozen  of  a  given 
article,  the  manufacturer  has  to  compute  the  railway  freight, 
cartage  and  other  charges  required  to  put  that  quantity  of  the 
goods  F.O.B.  vessel,  calculate  the  ocean  freight  that  must  be 
paid,  and  add  the  marine  insurance  premium.  Obtaining  the 
total  charge  on  a  shipment  of  a  hundred  dozen,  it  is  easy  for  him 
to  quote  a  rate  per  dozen  C.I.F. 

Fluctuations  in  ocean  freight  rates  are  not  usually  so  extreme 
as  greatly  to  afiPect  the  quoted  C.I.F.  price  per  unit.  For  ex- 
ample in  one  steamship  ton  of  40  cubic  feet  about  350  pairs  of 
boots  and  shoes  may  be  packed.  The  difference  in  the  freight 
cost  per  pair  between  ocean  freight  rates  of  20  shillings  a  ton 
and  40  shilliugs  a  ton  will  therefore  only  amount  to  about  li/i> 
cents.  Such  variation  in  freight  rates  is  the  most  extreme  that 
is  to  be  anticipated  in  any  normal  times  when  shipping  condi- 
tions are  stable,  at  least  within  a  period  of  a  few  weeks. 

Extra  Profits  Through  C.I.F.  Quotations. — C.I.F.  prices  never 
fail  to  appeal  to  foreign  buyers  for  reasons  already  indicated. 
Most  manufacturers  therefore  believe  they  can  rely  on  getting 


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II:nitkij  STcVtes  Stejkhtjobucts  Uo^ipa'xv 


CONTRACT    COVERING    SAI.H!    OF- 


• 


CNITKD  STATES  STBBL  PRODDOTS  CO. 


k 


1 


Form  3—0.  I.  F.  Contract  Conditions. 


J 


GENERAL  CONDITIONS  OF  SALE 
B  Conditions  of  Sale  is  undctslood  lo  be  the  UNITED  STATES  i 


. PRODUCTS 


C  I   F 

C.  tc  F.  Sales. 


Execution  of 
Orders  or 
Shipment  of 


ditiona' 
f  lading. 


of  the  seller. 


esponsibility  for  the 
•x),  and  accepts  and  ; 

of  c.  i.  f.  5 
media 


E  lawfully  i 


il  of  goods  at  destination  or   for  loss  or  damage  in  transit.    The 

ti  as  are  covered  by  the  legal  responsibility  of  the  carriers  (or,  on 

all  usual  and  customary  clauses  in  the  bills  of  lading  as  well  as 

_    the-carriers  as  a  condition  of  their  accepting  the 

jrchaser  or  his  authorised  agent,  of  shipping  documents,  consisting  of  proper 

in  full  fur  goods  shipped,  without  prejudice  to  the  subsequent  ad)tist- 

ill  receive  the  goods  at  destination  ex  ships  tackles  as  fast 
entilled   ,         ■  ■  - 

Unless  otherwise 


:  seller 


select   the   i 


s  on  the  part  of  the  pi 

can  discharge,  and  it  is  further  agreed  th; 
privilege  of  slopping  in  transit  at  port  or 
ing  lighterage,  wharfage  or  landing  charges,  dues,  duties,  etc,  are  not  mcluded  m  seller's  pr 

2.  Unless  otherwise  staled  in  quotation,  the  insurance  on  c.  i.  f  salts  is  understood  ti 
destination  covered  by  sales  price,  free  of  particular  average,  English  conditions,  for  a  su 
invoice  plus  ten  per  cent  Other  forms  of  insurance,  if  obtainable,  must  be  agreed  upon  i 
of  order,  the  additional  cost  to  be  for  the  account  of  (he  purchaser,  hut  no  form  of  insuran 
other  damage  unless  caused  by  a  peril  of  the  sea 

3  All  consular  fees  for  legalising  invoices,  stamping  bills  of  lading  or  other  dociimetii 
countries  of  destination,  ire  payable  by  the  purchaser  and  are  not  included  in  the  seller's  prii 
the  seller  is  authoriied  to  pay  same  for  purchaser's  account,  and  add  the  cost  to  the  invoic 

Seller  will  take  oat  coiuular  documents  as  agent  for  the  purchaser,  who  must  state  ho* 

but 'will  not  in  any  case  be  responsible  for  any  fines  or  other  charges  due  to  errors  or  incoi 

'4-3.  The  seller  shall  not  be  liable  for  failure  to  perform  this  contract  in  whole  or  in 
fires,  strikes,  disputes  with  workmen,  war.  civil  commotion,  epidemics,  floods,  accidents,  dela 
of  cars  or  other  causes  beyond  the  reasonable  control  of  the  seller  or  of  the  manufacture 
be  limited  or  waived  hy  any  other  terms  of  this  contract  whether  printed  or  written;  such 
the  purcliascr  from  his  ohlig;.tion  to  pay  for  the  good' 
the  event  cf  such  unavoidable  delay  the  purchaser  ma 


of   shipment   and   vessel   with 


the  ( 


;  of 'the  seller 
t  the  time  his 


6.  if  th. 
Shalt  be  final 
apply,  previo' 

7,  ClaiiT 


s  the 


/ship 


anv  portion  of  the  goods  at 
led'shall  become  due  in  acco 
suspension  of  any  shipment 

■da'iice  with'  the'spec'ificalior 
t  of  the  same  or  a  previou; 


mpletef 


iiufacturer's  plant,  and  payment  (or 
ent  herein  specified.  Insistence  upon 
Icr  may  be  treated  by  the  seller  as  a 
shall    thereupon    be   liable    for   all 

i  within  the  time  specified 


unexecuted. 


:  pla. 
esenting  the  purchaser  I 


ill  be  considered  by  the 
}r  investigation  by  sellei 
mied      Goods  must  not  I 

8     The  seller  agrees  that  the  goods 


9.     The  good! 
I  Landing  Certifit 


other  dai 
■e  to  be 


ant,  testi  to  which  (he  seller  has  previously  agreed. 

en  made  promptly  after  receipt  Of  the  good«  and  clue 
entatives  No  claims  for  labor  nnr  involving  consequ< 
:ept  by  permission  of  seller 

manufacturer's  plani  in  good  condition,  and  the  purcha] 


vill   I 


lisfactory  s 


rity  for 


ly  signed  by  the  Ci 

ry  securif. 
failure  of  the  purch; 

■uted,  without  prejudice  to  an; 

10     Unless  otherwise  stated  .i 


stinatinn  slated  by  the  pure 
i  AiUhorilies  at  the  port  of 
of  a 


;  the  i 


I  befoi 


riance  of  his  obligations,  and  refusal  1 
of  bis  obligations  under  this  or  any  oil 

9  the  seller  may  be  entitled  to  i^ake. 
)roved  by  the  seller  with  whom  irrevo 


e  goods  have  been 


for  relative  docu- 


cepicd  and  the  seller  s 


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V9 

THE  EXPORT  ORDER  333 

rather  better  returns  for  their  goods  in  this  fashion  than  if 
otherwise  quoted.  A  buyer  will  often  pay  a  higher  price  when 
there  is  no  uncertainty  or  risk  involved.  This  may  not,  how- 
ever, apply  in  highly  competitive  lines  where  all  sellers  are  ac- 
customed to  make  C.l.F.  prices  and  competition  is  on  this  basis. 
In  such  cases  very  close  figuring  is  usually  necessary.  In  ordin- 
ary lines  which  we  ship  from  the  United  States,  however,  a  good 
deal  better  margin  of  profit  is  possible  in  C.l.F.  prices,  as  in- 
deed no  seller  can  afford  to  assume  risks  involved  and  quote  any- 
tliing  but  liberal  prices. 

Profits  are  often  improved  also  by  following  a  very  common 
custom  of  quoting-  and  invoicing  C.l.F.  goods  in  the  currency  of 
the  foreign  country  to  which  they  are  shipped,  or  in  some  cur- 
rency usually  employed  by  that  country  in  international  trade. 
This  applies  especially  to  quotations  in  English  sterling  and 
French  francs.  If  a  C.l.F.  price  figur&s  out  when  converted 
into  English  money  4  shillings,  ly^  pence,  it  is  quite  safe  to  make 
the  actual  quotation  4  shillings,  3  pence  and  pocket  an  extra  3 
cents  profit.  Similarly  one  can  usually  make  the  "even  money" 
terms  in  francs  which  has  been  suggested  in  a  former  chapter. 
Francs  5.21  is  an  unusual  and  an  unnecessarj^  quotation  in 
French  money.  It  should  be  either  francs  5.20  or  5.25 — if  not 
5.50. 

TERMS  OF  SALE 

American  manufacturers  seem  for  the  most  part  either  in- 
variably and  indiscriminately  to  demand  cash  or  to  feel  very 
much  embarrassed  in  contemplating  .such  a  demand.  That  em- 
barrassment may  perhaps  largely  be  because  of  the  current  criti- 
cism of  our  cash  terms  and  undue  emphasis  on  "European  long 
credit  terms,"  but  that  manufacturer  does  not  exist,  in  Europe 
any  more  than  in  the  United  States,  who  volunteers  liberal  terms 
to  unknown  customers.  Positively  the  only  safe  way  in  making 
general  quotations,  that  is  in  price  lists  and  circular  letters,  or 
even  in  making  personal  replies  to  inquirers  heard  of  for  the 
first  time,  is  to  demand  cash  payment.  However,  that  demand 
may  just  as  easily  be  made  diplomatically  as  offensively.  But 
the  basis  of  international  trade  is  not  the  cash  payment.  Diplo- 
matic ways  of  proposing  cash-in-advance-of-shipment  payments, 
considerations  affecting  the  extension  of  open  credit  accounts  in 


334  PRACTICAL  EXFORTING 

foreign  business  and  the  whole  very  important  subject  of  for- 
eign drafts  Avill  be  studied  in  detail  in  Chapter  XIV. 

"Net"  and  Credit  Terms. — "Net"  always  means,  of  course, 
payment  without  discouiit.  However,  "cash"  has  different 
meanings  in  different  countries.  In  England  "Terms  Cash" 
means  payment  within  a  day  or  two.  "Ready  Cash"  means  pay- 
ment in  five  to  ten  daj's.  In  France  such  accounts  are  often  due 
on  the  15th  or  the  30th  of  the  month.  Other  terms  relating  to 
payment  are  defined  by  British  authorities,  as  understood  in 
Great  Britain,  as  follows: 

"Two  and  a  half  per  cent,  for  cash"  means  that  such  deduc- 
tion will  be  made  from  invoice  amounts  if  payments  be  made 
within  from  five  to  ten  days.  "One  month's  credit"  in  Eng- 
land usually  means  payment  one  month  after  delivery,  but  in 
many  trades  this  is  accepted  as  meaning  payment  on  the  4th 
of  the  following  month  for  goods  bought  before  the  15th,  and  on 
the  4th  of  the  next  month  but  one  for  goods  bought  after  the 
15th.  "Payment  by  fourteen  days'  draft"  means  payment  by 
a  draft  at  fourteen  days'  date.  The  English  understanding  of 
an  expression  often  used  in  that  country  and  in  some  trade  with 
Europe,  "three  months'  discount  at  5  per  cent.,"  as,  for  exam- 
ple, on  a  bill  of  exchange,  should  be  understood.  Tlie  discount 
rate  is  the  rate  per  annum.  That  discount  on,  say  $100,  would 
be  $1.25. 

Common  German  terms  have  been  "thirty  days  with  2  per 
cent,  discount  or  ninety  days  net."  More  than  2  per  cent,  dis- 
count was  uncommon  in  Germany  as  well  as  in  France,  especially 
on  invoices  to  retailers,  but  a  note  due  ninety  days  after  date  of 
invoice  is  very  common.  Such  a  note  is  enclosed  with  the  in- 
voice and  promptly  returned  by  the  buyer  duly  accepted.  This 
is  regarded  as  a  distinct  advantage  in  the  collection  of  accounts, 
saving  time  and  obviating  friction  with  customers.  A  similar 
settlement  is  also  common  in  Canada.  It  is  a  practice  which 
might  advantageously  be  adopted  by  Americans  who  find  them- 
selves obliged  to  do  a  certain  kind  of  open  credit  business  abroad, 
which,  indeed,  will  almost  certainly  be  extended  in  our  domestic 
business  with  the  anticipated  development  of  our  discount  mar- 
kets. But  open  credits  are  exceptional  in  the  export  trade  and 
only  to  be  approved  under  certain  conditions,  as  we  shall  see. 


THE  EXPORT  ORDER  335 


FOREIGN  CREDIT  RATINGS 

Contrary  to  the  popular  impression  which  has  been  rather 
industriously  cultivated  by  some  of  our  amateur  advisers  as  to 
export  trade,  there  are  undoubtedly  more  credit  reports  on  mer- 
chants throughout  the  world  actually  available  in  the  United 
States  to  our  manufacturers  than  are  to  be  found  in  any  other 
country,  "Some  manufacturers  who  are  beginners  in  the  ex- 
port trade  appear  to  be  so  elated  over  the  receipt  of  a  foreign 
order  that  they  fill  it  unquestionably,  look  for  settlement  hope- 
fully, and  frequently  have  occasion  to  regard  their  complaisance 
mournfully.  They  overlook  the  fact  that  they  would  have 
scrutinized  an  order  from  a  domestic  customer  very  closely  be- 
fore filling  it.  A  few  experiences  of  this  description  are  apt  to 
prejudice  the  budding  exporter.  'No  more  foreign  business  on 
credit  for  us.  Henceforth  we  get  cash  in  New  York  before  we 
let  the  goods  out  of  our  hands.'  "  ^ 

Distinction  Between  Foreign  and  Domestic  Risks. — It  prob- 
ably happens  in  very  few  instances  that  American  manufac- 
turers extend  credit  even  to  domestic  concerns  solely  on  the 
strength  of  agency  reports.  Probably  in  eight  or  nine  out  of 
every  ten  cases  the  manufacturer's  traveling  representative  is 
personally  acquainted  with  the  buyer,  familiar  with  his  estab- 
lishment, his  business,  his  facilities,  his  personal  idiosyncrasies. 
In  the  case  of  foreign  customers  conditions  are  often  precisely 
the  reverse  of  this.  It  is  obviously  one  thing  to  extend  credit 
to  customers  in  the  nited  States  under  the  conditions  outlined 
and  quite  another  thing  to  extend  credit  under  other  conditions 
to  foreign  buyers  about  whose  personality  nothing  whatever  is 
known.  There  are  a  great  many  large  and  responsible  concerns 
in  all  parts  of  the  world  who  may  safely  be  indulged  with  any 
credit  they  are  likely  to  seek,  but  before  the  extension  of  credit 
of  any  sort  a  very  thorough  investigation  should  be  made  of 
the  record  and  status  of  the  proposed  customer. 

Principles  Governing  Foreign  Credits. — The  principles  that 
should  govern  all  export  business  are:  Never  ship  anything 
to  an  unknown  concern  on  terms  that  involve  the  smallest  risk. 
Never  extend  any  credit  favors  to  foreign  concerns  until  their 

1  A.  J.  Wolfe  in  American  Exporter. 


336  PRACTICAL  EXPORTING 

standing    has    been    investigated    as    thoroughly    as    possible. 

C.O.D,  transactions  with  unknown  foreign  houses  are  thor- 
oughly unsafe.  While  trade  in  a  great  many  other  countries  is 
rightly  characterized  as  much  more  stable  than  is  trade  in  our 
own,  yet  there  are  irresponsible  and  tricky  concerns  in  every 
market.  The  mere  fact  that  a  proposed  buyer  has  an  impressive 
letterhead  and  appears  to  be  a  large  importer  of  goods  is  not  a 
recommendation  to  credit  favors. 

If  the  character  of  foreign  credit  reports  differs  widely  from 
those  we  are  able  to  obtain  about  our  domestic  customers,  yet  the 
foreign  reports  are  quite  as  reliable  and  quite  as  desirable. 

How  Ratings  Can  Be  Obtained. — There  are  but  two  or  three 
rating  books  in  foreign  countries  which  are  available  to  Amer- 
ican manufacturers.  An  ambitious  British  publication  of  this 
sort  which  is  fairly  reliable  but  far  from  comprehensive  is  sold 
to  bankers  only.  On  books  available  in  one  or  two  other  coun- 
tries of  the  world  not  too  much  reliance  can  be  placed,  and 
usually  they  are  chiefly  notable  by  their  omissions.  The  manu- 
facturer cannot  therefore  depend  upon  rating  books  in  any  for- 
eign market.  There  are,  however,  in  all  countries  facilities  for 
obtaining  commercial  reports.  There  are  mercantile  agencies 
and  credit  protection  societies  from  whom  reports  can  be  pur- 
chased, even  by  foreign  houses,  although  sometimes  it  is  neces- 
sary to  subscribe  and  pay  in  advance  for  fifty  or  one  hundred 
inquiiy  forms. 

Sundry  trade  associations  in  the  United  States  and  even  local 
chambers  of  commerce  in  some  of  our  cities  maintain  export  in- 
formation bureaus,  through  which  credit  reports  of  a  sort  are 
often  to  be  had.  The  modern  export  trade  paper  includes  in  its 
"Service"  department  the  supplying  of  credit  information 
about  foreign  concerns,  and  this  is  one  of  the  features  on  which 
special  stress  is  laid,  which  is  available  in  some  cases  without 
charge,  in  others  for  a  nominal  fee. 

Leading  American  commercial  agencies  have  facilities  for  sup- 
plying foreign  reports  also.  The  rating  books  which  they  pub- 
lish covering  the  United  States  also  include  Canada  and  Hawaii, 
a  fact  often  overlooked.  Reports  from  almost  any  market  in 
the  world  may  be  obtained  through  them  and  are  as  reliable  as 


TUB  EXPORT  ORDER  337 

any,  but  complaint  has  sometimes  been  heard  of  what  have  been 
regarded  as  rather  high  fees. 

American  consuls  should  never  be  asked  for  reports  on  busi- 
ness houses  in  their  districts,  or  even  for  information  when  local 
concerns  have  ignorantly  mentioned  the  American  consul  as 
one  of  their  references.  The  regulations  of  our  State  Depart- 
ment forbid  our  consuls  to  give  information  of  this  character  or 
to  act  as  references. 

Credit  Advices  from  Banks. — On  the  other  hand,  it  is  quite 
generally  the  practice  for  bankers  in  foreign  countries  engaged 
in  commercial  business  to  respond  to  proper  and  evidently 
legitimate  inquiries  from  manufacturers  in  other  countries  with 
an  opinion,  when  the  subject  of  inquiry  is  located  in  their  own 
cities  and  is  known  to  them.  An  American  manufacturer  may 
address  a  bank  in  the  city  where  a  prospective  customer  is  lo- 
cated, asking  the  bank's  opinion  regarding  that  prospect  and 
offering  to  pay  the  bank's  customary  fee.  International  reply 
coupon  should  be  enclosed  with  the  application  of  prepay  postage 
on  the  bank's  reply,  and  sometimes  such  banks  will  send  a  debit 
note  for  a  nominal  amount  as  its  charge  for  supplying  the  in- 
formation. When  such  a  charge  is  made  it  must,  of  course,  be 
immediately  liquidated  by  the  manufacturer,  who  should  return 
post  office  money  order  or  bank  draft  or  other  funds  current  in 
the  country  in  question.  A  better  way  of  seeking  bank  informa- 
tion is,  instead  of  writing  directly,  to  request  one's  own  domestic 
banker  to  make  the  enquiry  of  the  foreign  bank.  Many  British 
and  Colonial  banks  insist  upon  this  procedure. 

Such  bankers'  opinions  are  highly  desirable,  even  though 
other  reports  received  may  apparently  be  founded  upon  these 
same  opinions.  As  many  sources  as  possible  of  information 
about  foreign  credit  risks  should  always  be  consulted  in  order 
to  balance  opinions  against  each  other.  If  two  or  three  bankers' 
opinions  are  to  be  had,  as  many  should  be  sought,  because  the 
prospect  may  be  regarded  bj'"  different  bankers  in  his  market  in 
quite  different  lights. 

Foreign  exchange  bankers  in  New  York  City  through  whom 
manufacturers  may  be  accustomed  to  negotiate  their  foreign 
drafts  may  sometimes  have  on  file  information  about  the  leading 


338  PRACTICAL  EXPORTING 

houses  in  those  foreign  markets  where  they  do  an  especially  large 
business.  The  New  York  branches  of  banks  established  in  for- 
eign countries  almost  always  have  files  of  duplicates  or  resumes 
of  reports  collected  by  their  foreign  houses  about  business  con- 
cerns in  each  district  where  they  are  located.  These  bankers  are 
also  in  a  position  to  cable  abroad  for  information  about  given 
foreign  houses  when  that  information  is  urgently  required,  re- 
ceiving a  reply  by  cable.  This  is  usually  an  expensive  procedure 
for  the  manufacturer,  seldom  worth  while  except  as  to  inquiries 
covering  proposed  transactions  of  considerable  moment.  The 
information  received  by  cable  is  sure  to  be  brief  although  to  the 
point,  and  is  of  course  confirmed  by  later  letter.  Naturally  all 
banks,  American  or  foreign,  in  giving  information  to  manu- 
facturers are  prompted  by  the  hope  or  expectation  that  the 
manufacturer  who  contemplates  the  business  about  which  he  in- 
quires will  pass  his  drafts  or  other  collection  papers  through 
them. 

It  should  further  be  noted  that  by  no  means  all  foreign  banks 
are  willing  to  give  credit  information  regarding  concerns  in  their 
localities.  Government  banks,  the  Bank  of  England,  the  Reichs- 
bank  of  Germany,  the  State  Bank  of  Russia,  the  Banco  de 
Espana  and  similar  institutions  in  other  countries  are  not  al- 
lowed to  give  "opinions."  Savings  banks  and  agricultural  loan 
banks  are  not  suitable  sources  for  reports  of  this  sort. 

Time  Available  for  Investig'ating  Credits. — Almost  always 
the  manufacturer  has  ample  time  for  making  the  necessary  in- 
vestigation regarding  the  standing  and  character  of  his  foreign 
prospects.  Perhaps  rarely  does  an  order  instantly  follow  the 
receipt  of  catalogue  and  quotations.  Negotiations  of  one  sort  or 
another  almost  invariably  intervene,  allowing  ample  time  for 
credit  investigation.  If  orders  do  promptly  follow  the  receipt  of 
prices,  they  are  usually  for  samples  only  and  seldom  involve  any 
large  sum  of  money.  If  terms  for  first  orders  or  sample  orders 
have  been  carefully  specified  by  the  manufacturer  in  soliciting 
business  from  foreign  prospects,  such  first  orders  should  in- 
variably be  placed  in  accordance  with  the  manufacturer's  terms. 
Initial  orders  of  large  value  from  new  customers  almost  without 
exception  involve  and  presuppose  the  exchange  of  several  letters 


TEE  EXPORT  ORDER  339 

back  and  forth  in  which  prices,  qualities,  references  and  terms 
are  ar<,'ued,  and  exphmations  given. 

"Personal  Statements"  Abroad. — Personal  statements  are 
unusual  in  foreign  countries.  They  ought  seldom  if  ever  to  be 
asked  for.  In  Latin  America  a  request  for  such  a  statement  is 
quite  often  regarded  as  an  insult ;  so,  too,  in  the  Orient.  In 
both  instances,  when  such  a  statement  is  made  too  much  credence 
should  not  be  placed  in  it.  Foreign  business  men  have  not  been 
"educated  up"  to  making  personal  statements  as  have  we  in  the 
United  States. 

Character  of  Foreign  Ratings. — The  criticism  is  often  made 
tliat  reports  on  foreign  business  houses  are  not  comprehensive 
and  detailed,  that  they  lack  definite  data.  On  the  other  hand  it 
seems  probable  that  our  American  commercial  reports  are  sadly 
overloaded  with  detail.  The  value  of  a  risk's  office  furniture 
really  has  little  bearing  on  our  disposition  tc  extend  him  credit 
for  large  sums  of  money.  In  some  other  countries  similarly  use- 
less details  are  sometimes  otfered,  including  the  personal  char- 
acter of  a  risk's  brother-in-law  and  his  family  connections. 
Such  details  which  characterize  reports  in  certain  European 
countries  are  matched  by  others  of  varying  description  in  reports 
from  other  parts  of  the  world.  If  the  brevity  of  foreign  reports 
is  sometimes  criticized,  it  must  be  confessed,  that  as  a  rule,  they 
give  the  essential  information  which  is  required,  namely,  the 
general  trade  reputation  of  the  risk,  whether  he  is  old  or  new, 
small  or  large. 

Usually  a  good  deal  can  be  accomplished  towards  securing 
specific  information  if  the  manufacturer's  inquiry  itself  be' 
specific.  Thus,  instead,  merely  of  inquiring  for  "a  report"  on 
So-and-So,  if  the  request  be  as  to  the  advisability  of  extending 
credit  up  to  a  certain  given  limit,  $500,  or  $5,000,  as  the  case  may 
be,  on  stated  terms,  sight  draft,  ninety  days'  acceptance,  or 
what-not,  the  reply  received  is  almost  certain  to  say  "Yes"  or 
"No"  in  direct  answer  to  such  inquiries.  This  is  a  distinguish- 
ing characteristic  of  foreign  credit  reports  as  compared  with 
American. 

Essentials  in  Foreign  Ratings. — In  principle  the  main  con- 
sideration that  establishes  the  credit  of  an  importer  in  any  for- 


340  PRACTICAL  EXPORTING 

eign  country  is  his  general  trade  reputation  and  the  fashion  in 
which  he  meets  the  foreign  drafts  that  are  continually  being 
dra\\Ti  upon  him,  not  only  by  manufacturers  of  the  United 
States  but  by  manufacturers  in  England  and  all  other  countries 
with  which  he  does  business.  When  a  manufacturer  learns  that 
the  prospect  has  been  in  business  for  twenty  years  or  fifty  years, 
does  a  large  business,  and  has  invariably  maintained  an  un- 
blemished reputation  for  taking  care  of  his  foreign  obligations, 
that  is  really  all  that  is  essential  for  him  to  know.  If,  on  the 
other  hand,  the  prospect  is  reported  to  be  just  established  in 
business,  then  much  greater  detail  is  to  be  sought.  Yet  in  many 
countries  it  is  not  so  easy  for  a  man  to  set  himself  up  in  or  to  go 
out  of  business  as  it  is  in  the  United  States.  A  good  many 
formalities  have  to  be  complied  with,  and  business  houses,  as  has 
been  remarked,  are  often  of  much  more  stable  character  than  is 
the  rule  here  at  home.  While  this  may  influence  to  some  extent 
the  general  conduct  of  business,  yet  it  by  no  means  forms  a 
serious  part  of  the  credit  question  as  affecting  a  specific  concern. 

Regfulation  of  Business  Houses  Abroad. — In  every  country  of 
Europe,  except  Great  Britain,  the  keeping  of  accounts  is  com- 
pulsory. Every  trader  is  compelled  by  law  to  keep  certain  pre- 
scribed books  and  the  statements  frequently  encountered  in  Eng- 
lish bankruptcy  courts,  "the  debtor  kept  no  books,"  is  unknown 
on  the  Continent. 

In  many  countries  of  the  Continent  the  law  specifically  de- 
scribes the  nature  of  the  account  books  to  be  kept,  some  of  which 
must  be  bound,  the  pages  have  consecutive  numbers,  no  entry  to 
be  rendered  illegible  by  striking  it  through,  nor  any  entry  to  be 
erased.  In  some  countries  business  men  must  retain  their  books 
ten  years  from  the  date  of  the  last  entry.  Some  books  have  to  be 
stamped  and  initialed  at  stated  intervals  by  duly  appointed 
authorities. 

In  most  of  the  countries  of  Europe  and  Latin  America  every 
firm  or  business  house  has  to  be  registered,  much  after  the  fashion 
in  which  corporations  or  limited  companies  have  to  be  registered 
in  the  United  Kingdom  or  the  United  States.  Not  onlj^  the  name 
and  nature  of  the  firm  must  be  entered  in  the  official  register  but 
also  the  names  of  each  partner,  each  partner  and  employee  en- 
titled to  sign  the  firm 's  name,  the  opening  of  a  branch  in  another 


THE  EXPORT  ORDER  341 

locality,  etc.  A  specimen  of  the  signature  of  the  firm  and  of 
each  person  entitled  to  sign  for  it  under  power  of  attorney  has 
also  to  be  registered,  and  any  change  in  the  firm,  such  as  the 
death  of  one  of  the  members  or  the  entry  of  another  partner, 
the  sale  or  discontinuance  of  the  business,  has  to  be  notified  im- 
mediately and  be  published  in  the  local  newspapers.  As  a  result 
if  one  wishes  to  find  out  who  are  the  real  proprietors  of  a  certain 
business,  it  is  quite  an  easy  matter,  as  well  as  the  obtaining  of  an 
extract  from  the  entry  regarding  any  particular  firm. 

Reliability  of  Foreign  Ratings. — Some  variation  in  the  re- 
liability of  reports  received  from  certain  foreign  countries  is  to 
be  noted.  Generally  reports  from  the  United  Kingdom,  France, 
Germany,  Austria-Hungary,  Australia,  South  Africa,  China  and 
Japan,  Cuba,  IMexico  and  possiblj'-  from  South  America  are  to  be 
regarded  as  reliable.  Reports  on  concerns  in  the  smaller  com- 
munities of  Latin  American  countries,  and  on  native  Indian 
firms  in  British  India,  etc.,  are  not  always  so  dependable,  and 
usually  lack  the  definite  particulars  which  we  think  necessary. 

Similarly  even  bank  opinions  may  be  modified  by  the  character 
of  the  operations  of  some  banks.  Thus  there  are  in  British 
India  certain  institutions  established  by  and  for  Indian  mer- 
chants, which  will  always  give  a  far  more  flattering  report  on  .a 
native  house  than  will  the  branches  of  strictly  European  banks 
located  in  India.  This  is  true  also  of  certain  banks  in  the  Balkan 
states,  in  Turkey  and  in  Egypt. 

References  of  Foreign  Merchants. — The  receipt  of  an  order 
from  a  previously  unknown  concern  unaccompanied  by  references 
of  any  sort  usually  arouses  suspicion  from  that  very  fact.  How- 
ever, it  sometimes  happens  that  really  desirable  customers  proffer 
orders  in  such  fashion,  though  seldom  involving  large  amounts. 
A  good  many  foreign  houses  prefer  not  to  give  the  names  of  any 
references  until  they  are  requested.  Large  concerns  may  hesi- 
tate to  give  any  one  as  a  reference  just  as  they,  themselves,  pre- 
fer not  to  have  the  annoyance,  and  what  thej^  sometimes  regard 
as  the  responsibility,  of  acting  as  reference  for  others.  Con- 
siderations affecting  references  given  by  merchants  and  their  in- 
vestigation are  much  the  same  as  those  we  have  reviewed  in  the 
last  chapter,  in  connection  with  foreign  agents. 

Common  phraseology  in  applying  to  European  concerns  whose 


342  PRACTICAL  EXPORTING 

names  have  been  given  by  a  prospective  customer  as  references 
may  read :  ' '  We  are  considering  a  business  proposal  from 
Messrs.  of  who  have  referred  us  to  you  for  informa- 
tion as  to  their  record  in  meeting  obligations,  etc. — We  shall 
esteem  it  a  favor  if  you  will  kindly  inform  us  in  confidence 
whether  this  is  a  firm  with  whom  you  could  recommend  us  to 
open  up  business,  whether  they  are  sovuid  financially  and  whether 
they  have  a  reputation  for  honorably  carrying  out  their  ob- 
ligations." 

A  typical  English  reply  to  such  an  inquiry'  might  read:  "We 
have  known  Messrs.  Blank  for  many  years.  Their  financial  posi- 
tion is  quite  sound  and  they  have  always  enjoyed  a  reputation 
for  carrying  out  their  obligations  in  a  straightforward  and  hon- 
orable manner." 

Such  a  report  as  this  would  be  regarded  by  an  Englishman  as 
thoroughly  satisfactory  and  upon  obtaining  such  information 
l)usiness  would  be  undertaken  without  hesitation. 

Keep  Ratings  Up  to  Date. — It  is  too  frecpiently  the  custom, 
once  having  obtained  information  about  a  foreign  customer,  to 
regard  it  as  good  indefinitely.  In  spite  of  the  greater  stability 
of  business  concerns  in  other  countries  to  which  reference  has 
already  been  made,  changes  frequently  do  occur  and  varying 
conditions  may  effect  the  standing  of  customers  abroad  as  well 
as  at  home.  No  credit  report  should  therefore  be  regarded  as 
applying  for  more  than  a  year,  unless  meanwhile  confirmed  by 
fresh  information.  Thus,  no  matter  what  a  manufacturer's  busi- 
ness experience  with  a  particular  customer  may  be,  no  matter 
if  transactions  have  been  numerous,  and  contracts  have  one  and 
all  been  satisfactorily  settled,  none  the  less  fresh  information 
ought  to  be  sought  at  least  once  a  year,  especially  as  in  the  lapse 
of  that  time  new  sources  of  information  about  the  risk  will 
almost  certainly  have  come  to  the  manufacturer's  knowledge. 
Credit  files  should  be  kept  strictly  up-to-date,  not  only  by  secur- 
ing annual  confirmation  of  previous  opinions,  but  by  utilizing 
every  opportunity  for  obtaining  information  from  new  sources, 
and  as  promptly  as  it  suggests  itself.  In  an  early  chapter  co- 
operation between  export  managers  was  urged.  In  no  other 
particular  is  it  likely  to  be  more  profitable  than  in  an  exchange 
of  credit  opinions. 


TEE  EXPORT  ORDER  343 


ACCEPTANCE  OF  ORDERS 

Greater  formality  in  business,  greater  importance  attached  to 
orders  and  to  samples  in  other  countries,  are  features  of  export 
trading  which  have  already  been  pointed  out.  Usually  in  for- 
eign countries  an  order  is  signed  by  both  parties  and  becomes  a 
contract.  If  there  are  some  loose  practices  in  this  connection 
here  at  home  in  the  United  States,  they  must  be  remedied  in  our 
foreign  relations.  First,  for  his  own  sake,  for  the  sake  of  his 
neighbors  and  for  American  commerce  as  a  whole,  the  manu- 
facturer must  invariably  and  without  exception  stick  to  his  word. 
When  he  accepts  an  order  he  signs  a  contract. 

Guess  Work  Barred. — Every  order  upon  its  receipt  should  be 
minutely  examined,  and  if  doubtful  points  are  involved  the 
whole  order,  or  at  least  those  points  about  which  there  is  doubt, 
should  be  held  up  until  a  mutual  understanding  has  been  arrived 
at  with  the  customer.  It  is  far  better  to  refuse  an  order  than 
to  execute  it  to  the  dissatisfaction  of  a  customer. 

Importers  in  other  countries  would,  as  a  rule,  much  prefer  to 
wait  for  their  goods  rather  than  have  the  manufacturer  guess  at 
doubtful  features,  and  guess  wrong.  Cable  request  for  correc- 
tion or  explanation  may  sometimes  be  made.  Time  may  be  suf- 
ficient, in  referring  doubtful  points  back  to  customers,  for  trans- 
mission by  correspondence  of  the  points  at  issue,  fully  stated  in 
the  simplest  and  clearest  language,  requesting  a  ' '  Yes  "  or  "  No  " 
by  cablegram  upon  receipt  of  the  explanation.  If  one  or  two 
items  are  not  clear  but  goods  have  been  bought  before  by  the 
same  customer,  then  it  may  be  possible  for  the  manufacturer  to 
assume  that  the  same  things  are  wanted  again,  but  any  assump- 
tion on  the  manufacturer's  part  is  usually  likely  to  result  in  com- 
plaints from  his  customers. 

Needless  to  say  exact  compliance  with  each  and  every  word 
of  an  order  and  exact  performance  of  all  its  terms  are  indis- 
pensable to  success  in  export  trade.  No  substitutions  must  ever 
be  made,  no  novelties  or  improvements  introduced,  without  first 
having  received  the  customer's  permission  and  approval.  Even 
old-style  packages  must  not  be  changed  to  what  recommend  them- 
selves to  the  manufacturer  as  better  or  handsomer  packages. 
The  manufacturer  cannot  tell  what  features  of  his  goods  or  their 


344  PRACTICAL  EXPORTING 

packing  may  have  been  the  very  features  that  particularly  recom- 
mended them  to  his  foreign  trade..  What  here  at  home  may 
be  regarded  as  an  improvement  may  not  appeal  to  foreign  buyers. 

Hence,  if  something  new  and  improved  has  been  brought  out 
since  the  receipt  by  one's  customers  of  previous  shipments  or  of 
samples,  then  the  goods  ordered  should  be  supplied  exactly 
identical  with  -former  goods  or  exactly  like  samples.  Meanwhile 
the  customer  may  be  advised  of  changes  which  have  been  intro- 
duced and  his  permission  solicited  to  ship  in  future  the  newer 
goods  in  place  of  tlie  old  styles.  "When  future  orders  are  antici- 
pated from  established  customers  it  is  often  a  good  plan  to  ship 
along  with  the  order  for  old-st^le  goods  a  sample  of  the  improved- 
product,  even  if  it  has  to  be  charged  for,  politely  assuming  in  the 
accompanying  correspondence  that  the  customer  will  be  glad  to 
have  this  done,  as  he  will  undoubtedly  approve  of  the  newer 
goods.  But  this  again  is  a  liberty  whicli  should  not  always  be 
taken.  The  American  manufacturer  should  avoid  the  possi- 
bility of  giving  an  impression  that  he  is  trying  to  force  anything 
on  his  customers. 

Engagements  Undertaken. — In  principle  a  manufacturer  or 
an  exporter  is  bound  by  the  action  of  his  foreign  agent,  provid- 
ing the  latter  has  not  transgressed  specific  instructions  and  the 
written  authority  given  him.  If  the  agent  has  transgressed  such 
authority  he  alone  is  responsible  and  cannot  pass  such  responsi- 
bility or  even  loss  over  to  his  principal  in  this  country'. 

It  should  be  borne  in  mind  in  accepting  orders,  that  is  in 
making  contracts  for  the  supply  of  goods,  that  unless  such  con- 
tracts specifically  exempt  the  shipper  from  the  effects  of  con- 
tingencies beyond  his  control,  then  he  may  be  held  by  the  courts 
of  this  country  and  of  England  for  breach  of  contract.  This 
point  came  up  frequently  after  the  outbreak  of  the  war  in 
Europe.  INIany  contracts  did  not  provide  exception  due  to  force 
mojoire,  a  French  term  meaning  a  force  that  is  practically  irre- 
sistible by  the  individual.  A  great  war  might  be  regarded  as  a 
eontingenc.y  beyond  the  seller's  control,  or,  as  defined  by  the 
courts,  "a  fortuitous  event  which  comes  without  design,  fore- 
sight or  expectation."  But  in  the  United  States  and  England 
practifi^  differs  from  tlu)t  of  European  countries  generall3^ 

In  til  is  country  and  in  (xreat  Britain  the  seller  is  not  exempt 


THE  EXPORT  ORDER  345 

from  liability  to  carry  out  his  contract  and  he  is  bound  to  ship 
the  goods,  cost  what  it  may — or  pay  penalty  for  not  shipping — 
if  no  provision  has  been  embodied  in  his  contract  to  cover  the 
event  of  force  majeure.  In  the  continental  countries  of  Europe, 
however,  an  opposite  view  is  taken  and  the  existence  of  a  state 
of  war  would  probably  be  accepted  as  a  sufficient  excuse  for  fail- 
ure to  carry  out  contracts  made  in  such  countries. 

Adherence  to  Shipment  Dates. — Strictest  attention  must  be 
paid  to  the  date  when  the  order  is  to  be  shipped.  "Shipment  in 
July"  means  shipment  during  the  course  of  that  month,  and  if  a 
bill  of  lading  is  dated  August  instead  of  July  serious  trouble 
may  follow.  If  no  suitable  steamer  is  sailing  for  the  desired 
port  during  the  month  of  July  then  the  order  should  be  held 
until  a  statement  of  the  facts  is  put  before  the  customer  and  his 
authority  received  to  make  August  instead  of  Jidy  shipment. 
The  date  of  the  bill  of  lading  is  usually  taken  as  the  shipment 
date.  Great  care  must  therefore  be  taken  to  have  this  document 
dated  within  the  prescribed  time;  sometimes,  but  not  always,  it 
is  possible  to  have  a  bill  of  lading  dated  in  advance  of  the  actual 
sailing  day  of  the  steamer. 

In  probably  no  countr}^  in  the  world  is  greater  importance 
attached  to  the  date  of  shipment  than  in  India  where  the  native 
houses  especially  are  very  particular  on  this  point.  No  goods 
which  are  in  any  way  late  may  safely  be  shipped  without  special 
permission  to  do  so  having  been  obtained  from  the  dealer.  There 
are  local,  formal  regulations  well  recognized  in  India  for  dealing 
with  the  questions  of  cancellations  and  allowances  in  the  event 
of  goods  being  late  shipped. 

Form  of  Order  Acceptance. — Just  as  a  fonnal  printed  quo- 
tation blank  has  been  recommended,  so  too  a  form  for  the  accept- 
ance of  orders  is  to  be  advised.  To  avoid  any  misunderstanding 
such  an  acceptance  of  order,  or  contract  note,  should  repeat  the 
same  details  as  those  included  in  the  order  itself  with  exact 
specification  of  the  goods,  their  prices,  discounts,  terms  of  pay- 
ment, delivery,  etc.  The  printed  post-card  acknowledgment  of 
order,  so  frequent  in  this  country,  is  another  of  our  rather  loose 
business  practices  wdiich  should  not  be  carried  into  our  foreign 
trade.  ^ 

1  During  the  late  war,  before  an  order  was  even  aeeepted,  or  preparations 


346  PRACTICAL  EXPORTING 

As  we  have  noted,  quotation  forms  should  give  warning  that 
unless  specific  instructions  are  received  as  to  shipping  routes, 
manner  of  packing,  amount  and  kind  of  marine  insurance, 
fashion  in  which  consular  declarations  must  be  made  and  other 
similar  details,  the  manufacturer  will  follow  his  established  prac- 
tices, use  his  best  judgment,  and  no  responsibility  is  in  such  cases 
to  attach  to  him.  The  same  warning  may  be  repeated  in  the  ac- 
ceptance of  orders  when  no  advices  or  instructions  have  been  re- 
ceived from  customers  in  such  regard.  Of  course  when  special 
instructions  have  been  given,  they  must  be  followed  to  the  letter. 
This  is,  perhaps,  the  one  invariable  rule  in  all  export  business. 

MAKING  THE  GOODS 

From  start  to  finish,  in  every  factory  operation,  export  goods 
should  receive  special  attention.  This  need  not  imply  increased 
cost  of  production,  for  systems  may  easily  be  introduced  which 
will  automatically  ensure  due  attention  to  the  details  required  in 
preparing  goods  for  foreign  markets.  If  increased  cost  is  neces- 
sitated, then  suitably  increased  prices  should  be  made,  for  ex- 
port trade  is  not  desirable  to  any  one  unless  it  is  profitable. 

The  rule  should  be  to  supply  goods  better,  if  anything,  for 
export  trade  than  those  usually  shipped  on  domestic  orders.  At 
any  rate,  more  attention  should  usually  be  given  to  the  finish  of 

were  made  to  manufacture  or  prepare  goods  for  shipment,  it  had  first  to  be 
ascertained  if  the  proposed  customer  were  satisfactory  to  the  competent  Gov- 
ernment authorities.  The  Euroj)ean  war  developed  tiie  necessity  of  securing 
Letters  of  Assurance  from  the  British  government  for  shipments  destined 
for  the  neutral  countries  of  northern  Europe.  Many  countries  of  the  world 
put  into  effect  export  and  import  embargoes,  or  prohibitions,  which  made 
it  necessary  for  American  shippers  to  secure  from  their  customers  in  such 
foreign  markets  licenses  from  their  own  government  officials  to  import 
the  required  goods  before  those  goods  could  be  shipped  from  here.  The 
American  government  itself  instituted  a  system  of  licenses  for  exports  ap- 
plying to  almost  every  kind  of  merchandise,  and  the  granting  of  such  li- 
censes, in  many  instances,  depended  upon  the  nationality  or  the  character  of 
the  consignee  as  determined  under  our  "Trading  With  the  Enemy  Act." 
Details  of  export  licenses,  import  and  export  permits,  priority  certificates 
and  numerous  otlier  complexities  and  complications  were  in  a  constant  state 
of  flux  varying  from  month  to  month,  almost  from  week  to  week.  Large 
and  elaborate  bureaus  created  at  Washington  with  branches  in  New  York 
and  other  cities  handled  the  tremendous  volume  of  business  required  by  the 
necessary  war  time  formalities.  Such  officials  formed  the  court  of  last  re- 
sort and  all  shippers  were  obliged  to  keep  in  constant  touch  with  them 


TEE  EXPORT  ORDER  U1 

export  goods  aud  to  their  fittings.  These  are  features  which 
make  the  first  impression  on  foreign  buyers  when  they  open  the 
cases  and  inspect  their  purchases,  the  first  things  that  commend 
goods  not  only  to  our  buyers  but,  in  turn,  to  their  customers. 
By  this  is  not  meant  that  any  ett'ort  should  be  made  to  imitate 
certain  notorious  practices  in  disguising  cheap  goods  to  look  like 
goods  of  better  qualities.  Plowever,  here  in  the  United  States, 
we  are  accustomed  to  put  up  with  a  great  many  crude  and 
roughly  finished  goods  which  are  not  desirable  at  all,  at  any 
price,  in  other  countries — no  matter  what  their  intrinsic  qualities. 

Export  Goods  in  the  Factory. — Details  of  the  manufacturing 
processes  involved  in  innumerable  trades  certainly  cannot  be  here 
considered.  Very  often  goods  as  regularly  made  for  the  home 
trade  will  be  suitable  in  all  respects  for  foreign  trade;  in  more 
instances  little  touches  of  one  sort  or  another  are  required  as 
export  goods  go  through  the  factory  which  must  have  the  manu- 
facturer's interested  attention.  It  may,  for  example,  be  neces- 
sary that  goods  be  dried  in  exceptionally  thorough  fashion  in 
order  that  they  do  not  sweat,  or  disintegrate,  or  separate,  when 
shipped  to  hot  and  damp  climates  or  even  when  merely  passing 
through  hundreds  or  thousands  of  miles  of  moist  sea  air.  Var- 
nish or  enamel  must  be  especially  hardened.  Now  and  then  some 
small  processes  must  be  performed  in  a  special  way.  These  are 
all  details  as  to  which  no  one  not  intimately  concerned  in  the 
trade  affected  can  possibly  instruct. 

Usually  an  order  that  is  to  be  manufactured  for  export,  before 
it  goes  to  the  factory,  should  be  designated  in  some  conspicuous 
fashion  "Export  Order,"  and  tickets  attached  to  raw  mate- 
rials or  the  goods  in  process  of  manufacture  should  similarly  be 
conspicuously  labeled  "Export"  in  one  fashion  or  another,  some- 
times by  special  tickets  of  red  or  some  other  color.  Goods  to 
be  taken  from  stock  should  be  picked  out  by  employees  who 
handle  no  other  than  export  business,  or  by  those  who  have  given 
special  attention  to  such  work  in  connection  with  their  regular 
duties. 

When  it  comes  to  the  packing  department  unusual  attention 
is  vitally  necessary.  Packing  instructions  as  received  from 
abroad  must  be  followed  to  the  letter.  If  no  instructions  have 
been  received,  then  the  greatest  care  and  discretion  must  be  exer- 


348  PRACTICAL  EXPORTING 

cised,  the  practice  of  other  and  more  experienced  manufacturers 
learned  and  followed,  or  new  methods  based  on  a  thorough  study 
of  actual  conditions  be  inaugurated. 

Grading  Goods. — Foreign  customers  seldom  understand,  until 
they  have  had  experience  with  them,  the  manner  in  which  some 
American  goods  are  graded  as  to  quality,  price,  etc.  The 
various  "selections"  of  upper  leathers  for  size  coupled  with 
qualit}',  texture,  blemishes,  etc.,  each  supplied  in  several  thick- 
nesses or  weights,  are  a  great  puzzle  to  many  new  possible  buyers 
of  such  leather  even  though  tliey  may  have  been  obtaining  the 
very  same  goods  from  French,  German  or  English  wholesale 
dealers  in  American  leathers.  These  wholesalers  buy  assort- 
ments as  we  market  them  but  make  a  very  much  closer  selection 
for  re-sale  and  charge  their  customers  aecordingl3^  A  good 
many  American  tanners  have  learned  to  follow  the  European 
example  in  selecting  their  export  goods  for  new  and  inexpe- 
rienced buj'ers. 

Foreigners  offer  a  great  deal  of  criticism  at  the  fashion  in 
which  we  pack  our  barrels  of  apples  for  export.  Thej^  expect 
apples  to  run  uniform  tlirough  the  barrel  from  head  to  bottom. 
In  all  such  instances  it  is  wise  to  meet  foreign  expectations,  even 
if  it  is  necessary  to  charge  increased  prices.  Although  the  price 
may  look  large  at  first,  explanation  and  later  demonstration  are 
certain  to  win  the  best  sort  of  trade,  the  trade  that  stays. 

Marks  of  Origin  and  Labels. — Although  not  always  neces- 
sary, it  will  never  be  a  mistake  to  stamp  all  export  goods,  ' '  ]\Iade 
in  U.  S.  A."  Regulations  affecting  goods  of  different  sorts  in 
many  countries  of  the  world  are  so  many  and  complicated  that  a 
whole  book  and  a  large  one  would  be  required  to  explain  them  in 
detail.  All  labels  and  descriptions  of  goods  must  be  full  and 
accurate.  The  United  States  is  only  one  among  many  countries 
where  "Pure  Goods  Laws"  are  in  effect.  Australia  is  par- 
ticularly strenuous  in  its  requirements  as  to  stamping,  descrip- 
tions, etc.  A  piece  of  jewelry  is  not  to  be  called  merely  "gold," 
but  it  must  be  labeled  "14-oarat  gold,"  12-carat,  or  18-carat,  or 
whatever  it  may  be,  "rolled  gold,"  "gilt,"  etc. 

Goods  for  France  must  not  be  stamped  "J.  Smith  &  Son,  New 
York  and  Paris."  That  would  be  held  as  an  infringement  of 
the  French  law,  designed  possibly  to  mislead  Frenchmen  into  the 


THE  EXPORT  ORDER  349 

belief  tliat  the  articles  were  made  in  France.  Similarly  as  to  the 
fashion  of  marking  goods  with  French  words — " L'Ideal,"  ^' La 
Rapide/'  etc.,  are  regarded  in  France,  when  used  without  any 
additional  designation  in  a  foreign  language,  as  giving  an  impres- 
sion that  the  protluct  is  French  and  hence  likely  to  deceive  the 
customer. 

No  established  American  practices  in  common  vogue  are  likely 
to  cause  trouble  in  any  foreign  country.  The  situation  simply  is 
that  so  far  as  nuirks  on  the  goods  themselves  or  their  immediate 
packing  are  concerned,  inquiry  should  be  made  when  customary 
legends  employed  on  domestic  goods  are  not  quite  exact  or  are 
elaborate  or  unusual.  So  far  as  descriptions  of  goods  are  con- 
cerned, if  they  are  simple  and  honest,  as  well  as  complete,  no 
trouble  is  likely  to  ensue  anywhere.  Special  instructions  for  in- 
voicing and  other  similar  purjjoses  ought  alwaA's  to  be  given  by 
buyers  when  placing  orders,  otherwise  penalties  that  may  be 
incurred  are  for  the  buyer's  and  not  the  seller's  account,  al- 
though the  seller,  in  the  interest  of  harmony  and  mutual  profit 
should  always  specifically  enquire  for  instructions.  In  seeking 
information  for  his  own  benefit  the  seller  may  consult  the  tariff 
laws,  etc.  of  the  country  of  destination,  applying  to  the  nearest 
consul  in  the  United  States  of  that  country,  or  the  Bureau  of 
Foreign  and  Domestic  Commerce,  Department  of  Commerce,  or 
(as  concerns  Latin  American  markets)  the  Pan-American  Union, 
Washington. 

Certain  special  requirements  for  British  India  may  be  learned 
from  the  I\Ierchandise  IMarks  Act  of  that  Empire  to  be  found  in 
a  monograph  in  India  known  as  Special  Consular  Reports  No. 
72,  to  be  obtained  from  the  Bureau  of  P'oreign  and  Domestic 
Commerce. 


CHAPTER  XI 

PREPARING  SHIPMENTS 

How  Steamer  Differ  from  Rail  Shipments — How  Cargo  Is 
Loaded  on  Board  Steamships,  Unloaded  and  Transshipped — 
Packing  Required  for  Adequate  Protection  of  Goods — The 
Packing  Which  Is  Sometimes  Desirable  on  Account  of  Local 
Foreign  Conditio7is — How  Export  Weights  and  Measurements 
Are  Calculated — Marks  and  Addresses  on  Packages  for  For- 
eign Shipment — Making  Export  Invoices. 

FEW  of  our  export  advisers  have  failed  to  include  in  their 
speeches  and  writings  a  tirade  against  American  manu- 
facturers for  amateurish  and  grossly  inadequate  packing 
of  export  goods.  The  present  writer  takes  some  pride  in  never 
having  joined  in  this  hue  and  cry  for  he  has  long  been  con- 
vinced that  the  great  bulk  of  American  exports  are  well  and 
properly  packed,  in  spite  of  many  glaring  examples  of  how  not 
to  do  it.  A  good  deal  of  criticism  that  has  been  offered  has  cer- 
tainly been  based  on  insufficient  premises.  A  single  wretchedly, 
ignorantly  packed  case  of  envelopes  for  Ecuador  is  to  be  con- 
trasted with  hundreds  of  cases  of  magnificently  packed  sewing 
machines,  typewriters,  cash  registers  for  the  same  destination. 
Moreover,  our  manufacturers  are  not  the  only  offenders.  By  one 
mail  the  Aynerican  Exporter  receives  photographs  of  a  case  of 
lawn  mowers  from  the  United  States  received  in  "kindling 
wood"  at  Manila,  the  proprietor  of  the  shop  standing  by  with 
hands  stretched  out  in  protest  to  heaven ;  by  another,  photographs 
of  a  shipment  of  printing  machinery  received  from  Germany  by 
a  newspaper  publisher  in  South  America,  the  cases  smashed,  the 
contents  lost  or  broken. 

Much  American  Packing  Excellent. — Criticism  of  some  of 
our  export  jiacking  is  emphatically  necessary.  There  are  many, 
a  great  many,  outrageous,  inexcusable  examples  of  the  grossest 
ignorance  and  carelessness,  yet  there  is  certainly  too  little  ap- 

250 


PREPARING  SHIPMENTS  351 

preciation  of  the  unusually  fine  packing  which  characterizes 
our  largest  and  most  experienced  shippers.  Certainly  in  many 
lines  American  packing  sets  an  example  to  all  the  world,  has  in 
fact  been  used  as  an  example  to  German  manufacturers  by  ad- 
visers in  that  country.  Thus  we  find  in  "Export  Teclmik,"  a 
standard  text-book  in  Germ:an  commercial  schools,  by  Robert; 
Stern,  professor  in  the  Commercial  High  School  of  Leipsig: 
"Very  especially  are  the  manufacturers  of  the  United  States 
notable  for  their  appropriate  and  adequate  packing  of  small 
articles,  particularly  hardware.  Even  in  their  larger  cases,  the 
neat  and  attractive  packages  of  American  manufacturers  are 
immediately  to  be  distinguished  from  others." 

So,  too,  British  experts  have  advised  British  manufacturers 
that  Americans  in  shipping  to  Australasia  overcome  tariff  prefer- 
ences in  favor  of  some  British  goods  by  a  saving  of  25  per  cent, 
or  30  per  cent,  in  freight  charges  through  lower  freight  rates 
and  the  more  scientific  packing  of  American  goods.  It  is  notable 
that  the  greater  part  of  the  criticism  of  American  packing  comes 
from  Latin  America.  Europe  seems  to  be  satisfied  with  our 
methods,  perhaps  because  the  trade  of  Europe  is  largely  carried 
on  by  older,  more  experienced  shippers  on  a  bigger  scale,  more 
likely  because  conditions  in  handling  shipments  are  simpler  and 
more  modern.^ 

If  experienced  exporters  long  ago  learned  how  to  ship  their 
goods  in  the  most  satisfactory  way,  the  beginner  must  under- 
stand the  principles  involved,  so  radically  different  in  ocean  than 
in  rail  transportation — must,  as  soon  as  he  can,  learn  a  never-to- 
be-forgotten  lesson  of  what  ocean  shipping,  loading,  carriage, 
landing,  mean. 

STEAMER  SHIPMENTS  DIFFER  FROM  RAIL 

Any  one  who  has  ever  traveled   by  an   ocean   steamer  and 

1  In  this  connection,  note  the  remarivs  of  Professor  Cherington  of  the 
Harvard  Graduate  School  of  Business  Administration:  "There  is  plenty 
of  evidence  that  in  some  resjiects  American  manufacturers  are  the  cleverest 
packers  in  the  world.  The  chief  complaints  from  Latin  American  markets 
on  this  score  seem  to  grow  out  of  the  fact  that  the  handling  conditions  in 
many  of  those  countries  are  such  that  tlie  packages  sent  there  must  be 
individual  products  of  the  packer's  craft  and  not  the  output  of  any  packing 
and  shipping  system,  no  matter  how  efficient." 


352  PRACTICAL  EXPOBTING 

watched  the  processes  of  loading  and  unloading  cargo — indeed, 
any  one  who  has  so  much  as  visited  an  ocean  steamer's  pier  and 
observed  these  processes,  needs  no  explanation  of  the  necessity 
for  packing  export  goods  with  quite  different  attention  than  for 
home  shipment.  A  thorough  understanding  of  these  processes 
is  the  first  essential  to  correct  packing  for  export.  If  the  manu- 
facturer or  his  shipping  clerks  cannot  in  person  visit  ocean 
steamer  docks,  an  effort  should  be  made  to  visualize  the  scene  and 
then  to  follow  the  goods  that  are  shipped  from  rail-end  across 
the  seas. 

Capacity  of  Steamers. — Incidentally,  it  is  of  interest  to  note 
the  capacity  of  ocean  steamers.  A  fairly  large  ocean  cargo  vessel 
will  carry  the  contents  of  at  least  300  American  railway  freight 
cars,  that  is,  it  will  take  several  long  railway  trains  to  fill  her 
holds.  It  takes  about  500  standard  tank  railway  cars  to  fill  one 
of  the  great  tank  steamers  carrying  petroleum  in  bulk  to  Europe. 
Perhaps  the  capacity  of  ocean  steamships  may  best  be  impressed 
by  specific  illustrations.  Let  us  disregard  the  varying  types  of 
vessels  and  their  capacities  as  affected  by  the  construction  of 
holds,  hatchways,  etc.,  and  suppose  that  the  ship  we  select  will 
carry  equally  as  well  cargo  of  any  sort  and  that  it  is  possible  to 
load  a  vessel  to  its  full  capacity  with  one  kind  of  cargo — which, 
by  the  way,  cannot  always  be  done  although  common  practice  in 
some  staples  like  wheat,  coal,  lumber,  etc. 

Let  us  take  as  our  vessel  one  of  the  newer  and  larger  boats 
of  the  Atlantic  Transport  Line,  which  have  a  deadweight  cargo- 
carrying  capacity  of  say,  15,000  tons.  Suppose  that  a  fairly 
important  manufacturer  in  his  line  wished  to  load  this  vessel 
with  plows.  On  the  basis  of  the  average  size  as  exported,  it 
would  require  247,500  plows  to  fill  this  ship.  If  the  manufac- 
turer in  question  followed  his  usual  factory  routine  and,  along 
with  his  normal  production  of  other  implements,  harrows,  culti- 
vators, rakes,  repairs,  etc.,  turned  out  20,000  plows  a  year,  it 
would  take  him  twelve  and  one-half  years  to  fill  this  ship  with 
plows  alone.  If  he  were  to  turn  over  the  whole  plant  to  plows, 
producing  no  other  implements,  lease  another  factory  and  jump 
to  the  top  of  the  list  of  plow  manufacturers,  he  might  reach  an 
output  of  100,000  plows  a  year  and  complete  this  cargo  in  two 
and  one-half  years. 


PREPARING  SHIPMENTS  353 

A  boot  and  shoe  manufactory  finishing  daily  1,000  pairs 
would  require  twelve  years  to  collect  a  cargo  for  this  ship  and 
such  an  unprecedented  cargo  would  be  worth  from  $4,000,000 
to  $12,000,000,  according  to  grade  of  the  goods  shipped.  If  this 
ship  were  to  be  loaded  with  "case  oil,"  i.e.,  kerosene  oil  in  five- 
gallon  tins,  two  tins  to  a  case,  300,000  cases  at  least  would  be  re- 
quired and,  with  the  best  of  facilities,  not  less  than  thirty  days — 
probably  forty-five — would  be  required  merely  to  load  and  stow 
them  away. 

As  another  illustration  take  the  machines  known  as  harvesters 
and  binders.  Six  thousand  of  them  would  be  required  to  com- 
plete this  cargo,  or  say  nearly  400  carloads.  Of  ordinary  mow- 
ing machines  15,000  would  be  needed,  employing  enormous  fac- 
tory facilities  and,  to  hazard  a  guess,  the  work  of  3,000  skilled 
men  for  a  month  or  two. 

A  flour  mill  producing  7,000  barrels  a  day  is  regarded  as  big. 
It  would  take  such  a  mill  one  month's  steady  grinding  to  pro- 
duce a  load  for  our  steamer  and  it  would  use  the  entire  crop  of 
from  250  to  300  average  farms  of  160  acres  each. 

Multiply  such  a  ship  load  by  one  hundred  and  sixty  and  the 
result  represents  the  weekly,  not  monthly  or  annual — the  weekly 
foreign  shipments  of  these  United  States  before  the  war. 

Loading  on  Steamships. — At  the  home  town  the  manufac- 
turer's dray  backs  up  to  a  railway  station  platform  and  cases 
are  wheeled  across  in  hand  trucks  to  the  level  floor  of  a  box  car 
waiting  on  the  other  side  of  the  station.  Conditions  are  alto- 
gether dift'erent  when  cases  are  delivered  to  a  steamer.  Tlien, 
operations  begin  with  dumping  the  cases  from  the  dray  to  the 
deck  of  the  pier.  They  are  then  at  the  mercy  of  the  longshore- 
men, a  motley  crew  by  no  means  famous  for  gentleness,  beating 
the  roughest  of  the  most  famous  baggage  smashers  caricatured 
in  our  humorous  papers.  Steamers'  cargoes  are  not  often  han- 
dled by  the  crew  of  the  ship  unless  by  way  of  assistance  to  the 
gang  of  longshoremen  who  are  especially  emploj^ed  for  loading 
and  unloading  the  cargo.  It  is  to  be  remarked,  too,  that  at  the 
other  end  of  the  voyage  longshoremen  are  likely  to  be  far  more 
ignorant,  insubordinate,  impervious  to  common  sense  and  wil- 
fully reckless,  than  at  this  end. 

The  manufacturer's  eases  have  been   dumped   on   the   pier. 


354  PRACTICAL  EXPORTING 

Alongside  lies  the  steamer  her  decks  rising  twenty  or  thirty  feet 
high.  How  is  the  freight  to  be  gotten  on  board  'I  Doors  in  the 
ship's  side  are  rare — as  rare  as  possible,  except  in  the  case  of 
American  coasting  vessels.  The  cargo  has  to  go  up  to  the  deck, 
then  down  again  into  the  vessel's  holds — three  or  four  stories 
down,  the  lower  holds  twenty  or  thirty  feet  below  the  surface  of 
the  water. 

Mechanical  apparatus,  conveyors,  telphers  and  the  like,  ought 
to  be  used  but  are  not,  save  in  exceptional  cases,  as  (at  some 
ports)  in  the  banana  trade.  One  reason  is  that  there  is  no  uni- 
formity whatever  in  the  sizes  and  weights  of  the  cases  and  other 
packages  which  go  to  make  up  a  steamer's  enormous  load.  An- 
other is  that  there  are  few  piers,  even  the  newest,  constructed 
with  room  or  facilities  for  such  apparatus.  To  the  layman  this 
seems  a  remarkable  state  of  affairs.  However,  the  reluctance,  not 
to  say  aversion,  of  steamship  companies  to  the  introduction  of 
mechanical  loading  and  unloading  devices  probably  has  good 
grounds  for  existence.  In  any  case,  a  certain  rough  manual  skill 
is  required  in  storing  away  cargo  in  the  ship's  holds. 

How  Cargo  Is  Hoisted. — Ships  are  still  loaded  in  very  much 
the  same  way  as  they  have  been  from  the  days  of  windjammers 
when  there  was  no  steam  or  other  power — by  means  of  the 
pulley,  the  rope  and  the  sling.  The  sling,  a  square  net  of 
knotted  ropes  measuring  perhaps  twenty  feet  on  a  side,  is  spread) 
flat  on  the  floor  of  the  steamship  pier.  Such  a  quantity  as  it 
will  hold  of  cases,  barrels,  crates  or  bundles,  is  heaped  into  a 
pile  in  the  center  of  the  sling.  The  corners  are  gathered  to- 
gether and  looped  into  a  great  steel  hook  dangling  at  the  end  of 
a  rope.  It  is  usually  the  steamer  that  supplies  the  power. 
Winches  on  its  deck  are  operated  by  steam  from  the  ship's  en- 
gines. Ships'  masts  exist  nowadays  solely  for  the  purpose  of 
serving  as  braces  for  the  several  booms  or  jibs  hinged  and  piv- 
oted to  each  of  them,  which  in  port  serve  as  derrick  cranes  for 
hoisting  cargo. 

Steel  or  rope  cables  run  through  pulleys  at  the  outer  ends  of 
the  swinging  booms  from  the  drum  of  the  winch  on  deck  to  the 
hook  which  grabs  the  load  in  the  rope  sling.  That  load  of  a  ton 
or  two  tons'  weight  may  perhaps  be  composed  of  a  dozen  or  two 
dozen  packages  of  varying  size,  weight,  strength  and  contents. 


PREPARING  SHIPMENTS  355 

As  the  load  is  hoisted  the  sling  compresses  all  these  packages  and 
the  weight  of  the  whole  rests  on  those  in  the  lowest  layer. 
Hundreds  of  pounds  above  are  quite  likely  to  crush  the  weak 
ones.  The  strain  on  the  corners  at  top  as  well  as  at  bottom  is 
likely  to  break  any  cases  not  strongly  made,  fully  packed  or  ade- 
quately reenforced. 

Up  into  the  air  goes  the  sling,  high  enough  to  clear  the  ship's 
decks,  swinging  to  and  fro  like  a  pendulum,  possibly  crashing 
against  the  steel  sides  of  the  vessel  on  the  way.  Now  the  boom 
is  swung  over  so  that  its  dangling  load  is  more  or  less  directly 
over  the  open  hatchway  of  the  ship  which  gives  access  to  the 
holds  far  down,  perhaps  next  to  the  very  keel.  At  a  signal  the 
winchman  lowers  away  the  sling.  Swaying  from  side  to  side, 
banging  against  the  steel  deck  beams  and  hatch-combings,  down 
it  goes  swiftly  until  at  another  signal  the  winchman  checks  its 
descent.  Sometimes  the  rough  apparatus  does  not  work  quickly 
enough.  Never  does  the  sling  land  below  decks  where  it  is  to  be 
stowed,  gently  as  a  feather  wafted  by  summer  breezes.  There's  a 
bump  or  a  crash  of  the  weight  of  a  ton  or  two.  The  steel  hook 
is  unfastened,  the  rope  sling  opened,  its  contents — a  pile  of  as- 
sorted packages  eight  feet  high  perhaps — fall  apart,  tumbling 
about  in  various  directions,  to  be  grabbed  by  the  half  naked  la- 
borers below  and  carried  by  hand,  rolled  or  tumbled,  to  the  dim 
recesses  of  the  hold  and  there  stowed  away  for  the  voyage 
through  seas  always  strong  enough  to  toss  the  whole  great  ship  a 
little,  sometimes  fierce  enough  to  throw  her  about  like  a  bubble. 
A  place  for  a  given  package  may  not  be  chosen  with  great  care 
and  deliberation  in  stowing  away  cargo. 

Cannot  the  reader  now  picture  to  himself  a  case  of  his  own 
goods  going  through  this  process?  It  must  stand  up  under 
heavy  weights  superimposed  on  it.  ]\Iore  often  than  not  it  is 
stood  on  its  head  or  laid  on  its  side.  It  must  endure  falls, 
bangs,  bumps,  crashes,  in  the  loading  of  the  ship.  It  may  have 
unpleasant,  even  dangerous  neighbors  who  will  make  their  pres- 
ence felt  when  the  ship  begins  to  roll  and  pitch.  What  is 
morally  sure  to  happen  if  the  boards  of  the  cases  are  old  and 
frail  and  what  will  be  the  result  to  the  goods  inside  ? 

Unloading  at  Destination. — Arrived  at  port  of  destination, 
the  processes  of  loading  the  ship  have  to  be  reversed,  slings  lift 


356  PRACTICAL  EXPORTING 

the  cargo  out  of  the  holds,  swing  outboard  and  deposit  their  con- 
tents either  on  quays  or  more  often  in  lighters  floating  alongside 
the  vessel.  There  are  few  except  the  greatest  ports  of  the  world 
where  ships  can  or  are  accustomed  to  tie  up  to  quays  or 
"docks,"  as  we  mistaketily  call  piers.  The  general  custom  is 
for  ships  to  anchor  in  the  stream  and  discharge  into  lighters 
which  then  proceed  to  the  shore  where  again  very  much  the  same 
performance  in  unloading  them  goes  on. 

Furthermore,  ships  are  by  no  means  always  able  to  anchor  in 
safe  and  secure  harbors.  At  hundreds  of  so-called  ports  there 
are  nothing  more  than  open  roadsteads  where  steamships  have 
to  lie  anywhere  from  one  to  live  miles  off  shore  in  the  open  sea. 
This  is  n.otably  the  case  all  along  the  west  coasts  of  Mexico,  Cen- 
tral and  South  America,  at  many  points  also  on  the  east  coasts. 
This,  too,  is  frequently  enough  the  case  at  ports  all  over  the 
world  outside  of  the  most  highly  developed  countries.  Many 
and  many  a  time  ships  have  to  pass  such  ports  as  Mollendo, 
Peru,  or  Jaffa,  the  port  for  Jerusalem,  because  seas  are  too  rough 
to  permit  the  discharge  of  cargo  or  landing  of  passengers. 

At  all  such  ports  there  is  likely  to  be  a  heavy  swell  running. 
The  lighters  put  off  from  shore,  range  alongside  the  steamer, 
bobbing  up  and  down  in  very  different  time  to  the  rolling  and 
pitching  of  the  ship.  With  ail  the  care  in  the  world  it  is  im- 
possible to  deposit  slings  of  cargo  from  the  ship  in  the  dancing 
lighters  without  bumps  and  crashes  or  without  an  occasional  bath 
of  spray. 

Transshipping  Cargo. — Consider  now  that  a  very  appreciable 
portion  of  tlie  shipments  of  every  country  does  not  proceed  direct 
to  port  of  destination  in  the  vessels  into  which  they  are  first 
loaded,  but  has  to  be  transshipped  into  other  vessels  at  connect- 
ing points.  There  are  certain  main  trade  routes  of  the  world 
over  which  ships  proceed  with  great  regularity,  but  these  routes 
have  many  feeders.  European  shippers  no  more  than  Amer- 
ican can  always  find  a  ship  proceeding  direct  to  every  port  they 
wish  to  reach.  It  is  often  necessary  to  forward  by  a  vessel  which 
in  the  course  of  her  voyage  will  transship  the  goods  to  some  port 
where  it  is  wished  to  land  goods.  Transshipment,  though  un- 
desirable, is  often  unavoidable.  When  goods  have  to  be  trans- 
shipped, all  unloading  and  loading  processes  from  and  into  ships, 


PREPARING  SHIPMENTS  357 

from  and  into  lighters,  have  to  be  repeated,  sometimes  repeated 
several  times  over.  Does  it  now  become  more  evident  what  sort 
of  cases  must  be  supplied  to  witlistand  the  treatment  described, 
of  how  different  ocean  shipping  is  from  rail  ? 

PACKING  FOR  PROTECTION  OF  GOODS 

Importers  in  foreign  countries  would  invariably  far  prefer  to 
pay  extra  for  appropriate  and  necessary  packing  rather  than 
suffer  loss  from  inadequate  protection  to  the  goods  they  have 
bought.  British  manufacturers  still  very  commonly  charge  ex- 
tra for  packing.  In  fact,  in  England  a  good  many  export  goods, 
notably  piece-goods  and  machinery,  are  prepared  for  ocean  ship- 
ment by  professional  packers  who  do  nothing  else  than  pack  for 
export  for  any  one  who  chooses  to  employ  their  services,  and 
there  are  established  and  printed  tariff  rates  applying  to  many 
kinds  of  goods  and  many  sizes  and  varieties  of  cases  and  bales. 
American  manufacturers  long  ago  gave  up  the  practice  of  charg- 
ing extra  for  packing,  eitlier  in  the  home  trade  or  for  export. 

Adequate  Charge  for  Packing. — It  is  probable  that  there  is 
too  great  hesitation  to-day  about  suggesting  extra  charges  for 
special  packing,  too  much  fear  of  advancing  quotations  for  some 
export  goods  to  cover  entirely  adequate  packing  which  will  nec- 
essarily be  more  costly.  Very  likely  a  good  deal  of  the  com- 
plaint against  American  packing,  both  domestic  and  foreign,  may 
be  due  to  manufacturers'  fear  of  competition.  Their  habit  of 
supplying  packages  free  for  which  forty  years  ago  they  used  to 
charge,  has  probably  resulted  in  the  cheapening  of  cases  and, 
generally,  of  the  protection  given  goods  in  transit,  while  our 
improved  transportation  agencies  have  made  less  necessary  old 
and  more  substantial  methods  of  packing. 

Similar  considerations  do  not  affect  the  export  trade.  By  all 
means  export  prices  ought  to  include  free  packing,  but  that 
packing  must  always  be  adequate  to  insure  arrival  of  goods 
safe,  sound  and  complete  in  the  hands  of  the  foreign  customer. 
If  ordinary  quotations  do  not  include  such  packing  that  is  ab- 
solutely adequate,  then  an  extra  charge  should  be  made,  or  bet- 
ter, quotations  advanced  to  cover  the  increased  packing  costs. 

Risks  of  Damage  Versus  Cost  of  Packing. — Sometimes  there 
may  be  a  choice  between  the  costs  of  extra  packing  and  the 


358  PRACTICAL  EXPORTING 

amount  of  possible  damage  to  goods  as  usually  packed.  This, 
however,  is  not  a  matter  for  the  manufacturer  to  decide.  It  is 
the  buyer  who  mast  make  his  choice  between  paying  extra  for 
special  packing  or  running  his  risks.  A  decision  is  usually  made 
after  consultation  between  buyer  and  shipper.  German  manu- 
facturers of  beer  bottles  have  shipped  those  bottles  unprotected 
in  common  jute  bags  to  some  Latin-American  markets.  Amer- 
ican manufacturers  of  cast  iron  pumps  have,  to  some  points, 
shipped  them  naked  without  packing  of  any  sort.  In  both  cases 
the  theory  may  be  that,  with  the  nature  of  the  goods  plainly  ap- 
pearing, more  attention  will  be  paid,  more  careful  handling 
given  and  the  resulting  loss  from  breakage  may  therefore  amount 
to  less  than  would  be  the  necessary  charge  for  cases  or  barrels. 

These  remarks  are  to  be  taken  purely  as  suggestions  and  the 
examples  quoted  must  not  be  accepted  as  precedents.  The  only 
safe  principle  is  to  pack  in  the  securest  possible  fashion,  no  mat- 
ter what  it  costs.^ 

Check  Goods  Before  Packing. — Before  export  goods  are 
packed  at  all  they  should  be  carefully  laid  out  where  no  possible 
danger  of  confusion  exists  and  checked  with  invoice  or  packing 
list  in  the  most  scrupulous  and  careful  fashion.  The  manufac- 
turer, through  his  shipping  clerks,  must  be  absolutely  certain 
that  exactly  the  goods  ordered  and  invoiced  are  actually  packed 
and  despatched.  We  have  already  remarked  how  much  more 
serious  are  complaints  on  this  score  from  foreign  than  from  do- 
mestic customers.  It  is  best,  whenever  possible,  to  have  two  per- 
sons do  the  checking;  one  confirming  the  other. 

Weighing  Goods  Before  Packing, — Always,  too,  the  contents 
of  each  case  should  be  carefully  and  exactly  weighed  before  pack- 
ing. This  for  two  reasons.  The  net  weight  of  the  goods,  to- 
gether with  the  gross  weight  when  packed,  is  a  check  against 
possible  thievery  en  route  and  a  proof  to  the  manufacturer  that 
the  exact  quantity  of  goods  as  checked  was  actually  despatched. 
Then  the  net  weight  of  the  goods  is  always  necessary  in  foreign 
trade  and  sometimes  it  is  also  necessary  to  know  the  so-called 

1  Valuable  and  detailed  technical  advice  is  to  be  found  in  a  recently 
published  work,  "Export  Packing,"  by  C.  C.  Martin. 


PREPARING  SHIPMENTS  359 

' '  legal ' '  weight,  which  is  the  weight  of  the  goods  themselves  with 
their  immediate  containers,  such  as  cartons,  bottles,  tins,  etc. 

Fit  and  Count  Small  Parts. — Checking  of  goods  before  pack- 
ing is  peculiarly  necessary  when  the  shipment  consists  of  a  num- 
ber of  parts  of  one  whole.  Every  screw,  rivet,  bolt  and  part, 
small  or  large — of  a  machine,  for  example — must  be  counted, 
after  having  been  fitted  into  its  appropriate  place  and  found  ex- 
act, and  must  be  checked  beyond  possibility  of  miscalculation. 
Aside  from  dissatisfaction  of  a  customer  and  the  uselessness  of 
a  unit  minus  essential  parts,  there  is  to  be  remembered  the  in- 
evitable extra  expense  and  delay  in  foreign  custom  houses  when 
missing  parts,  etc.,  are  delivered  by  later  shipments  and  do  not 
arrive  with  the  original  cases  to  which  they  belong.  In  line  with 
the  absolute  and  invariable  exactness  required  in  every  detail 
of  exporting,  the  necessity  of  the  careful  checking  of  goods  be- 
fore packing  must  have  special  emphasis. 

Cases,  Crates,  Bales,  etc. — In  principle,  cases  are  invariably 
to  be  preferred  to  crates,  and  either  case  or  crate  to  burlapped 
bundle.  A  crate  can  seldom,  probably  never,  be  so  strong  as  a 
ease  and  strength  is  evidently  required  in  the  processes  of  load- 
ing and  unloading  which  have  been  described.  Paper  or  paste- 
board packages  must  never  be  shipped — unless  for  enclosure  with 
others  in  suitable  cases.  ''Use  no  hooks"  is  a  phrase  without 
meaning  to  longshoremen  in  any  part  of  the  world.  Anything 
likely  to  be  damaged  by  their  hooks  must  never  be  packed  in  a 
bundle  or  bale.  Whenever  a  bundle  is  made  there  must  be  many 
strong  wrappings.  If  crates  are  ever  used,  exposed  surfaces  be- 
tween their  slats  must  not  be  of  a  kind  permitting  damage  or 
must  in  some  fashion  be  adequately  protected  inside  of  the  crate. 
The  shipper  cannot  provide  against  the  intrusion  of  the  comers 
of  other  cases  between  the  slats  of  his  crates. 

Lumber  to  Be  Used. — The  lumber  employed  in  the  manufac- 
ture of  cases  or  crates  may  be  one-half  inch  or  may  be  one  inch 
stufiP,  one  and  a  half  inch,  or  thicker,  depending  entirely  upon 
the  weight  and  the  nature  of  the  contents  of  the  case.  It  should 
not  be  too  heavy,  for  the  weight  of  the  packed  case  may  afCect 
charges  of  various  sorts  which  buyers  have  to  pay,  but  security  is 
never  to  be  sacrificed  to  lightness.     There  should  be  no  knot 


360  PRACTICAL  EXPORTING 

holes  in  the  wood  employed;  if  any,  they  should  be  covered  by 
squares  of  tin  securely  tacked  on  from  the  inside.  As  a  rule, 
cases  should  be  new  and  not  second  hand.  If  the  latter,  they 
must  be  as  good  as  new  in  every  respect. 

Lumber  may  be  light  as  well  as  strong  and  should  always  be 
matched,  that  is,  tongued  and  grooved,  because  ordinary  nailed 
boards  will  shrink  on  account  of  varying  temperatures,  sweating, 
etc.  Packing  cases  of  lumber  good  enough  to  arrive  in  excellent 
condition  are  of  real  value  to  many  importers  in  foreign  coun- 
tries. Good  American  lumber  is  rare  and  expensive  in  some 
countries  and  importers  easily  dispose  of  packing  cases  for  good 
prices.  The  wood  in  them  has  even  been  known  to  be  used  in 
making  coffins.  Other  materials  employed  in  export  packing  are 
also  valuable  in  foreign  countries.  Burlap,  waterproof  paper, 
etc.,  are  used  in  the  Orient  and  in  some  parts  of  Latin-America 
by  upholsterers.  Iron  bands  surrounding  bales  are  a  regular 
article  of  commerce  in  the  Far  East. 

Sizes  of  Cases. — Cases  should  not  be  too  large.  There  should 
be  no  waste  room  inside.  As  we  shall  see,  ocean  freight  rates 
are  often  charged  on  the  basis  of  cubic  measurements.  Waste 
of  a  cubic  foot  in  a  case  when  multiplied  many  times  over  means 
the  payment  of  considerable  extra,  useless  and  unnecessary 
freight  charges  by  consignees.  Furthermore,  empty  space  in  a 
case  is  a  source  of  weakness.  Again,  if  goods  are  not  tightly 
packed,  damage  may  result  to  the  contents  from  shifting  about. 
When  machinery  is  packed  and  there  are  necessarily  empty 
spaces  in  the  boxing  there  must  be  cross  battens  and  stays  that 
will  ensure  every  corner  and  edge  of  the  case  being  as  strong 
and  secure  as  though  it  were  fully  packed.  Every  case,  no 
matter  what  its  contents,  must  be  so  prepared  that  it  will  ride 
safely  whether  stood  on  its  head  or  laid  on  its  side. 

Weight  of  Cases. — It  is  better,  if  possible,  never  to  ship  eases 
Aveighiug  over  200  or  250  pounds  each  and  never  to  make  eases 
unusually  large  in  size.  In  a  great  many  foreign  ports,  eases 
must  be  moved  about  by  hand  or  by  the  most  primitive  of  appli- 
ances; facility  in  handling  will  often  reduce  the  risk  of  rough 
treatment.  The  size  and  M^eight  of  cases  is  often  dictated  by  the 
means  of  interior  tnmsport  available  in  countries  of  destination. 

The  bulk  of  our  export  trade  goes  to  markets  where  transpor- 


PREPARING  SHIPMENTS  361 

tatioii  facilities  are  as  good  as  they  are  in  the  Uaiited  States,  but 
a  considerable  share  is  destined  for  markets  of  another  descrip- 
tion where  even  if  there  are  good  facilities  at  ports  where  ship- 
ments are  landed,  yet  the  goods  are  destined  for  interior  points 
which  are  difficult  of  access  and  only  reached  by  cart,  or  on  the 
backs  of  horses,  mules,  donkeys,  llamas,  camels  or  coolies.  In 
such  cases,  instructions  should  always  be  given  by  buyers.  Such 
instructions,  it  has  already  been  remarked,  should  be  invited  and 
urged  and  must  be  followed  by  the  shippers  to  the  letter.  The 
load  of  a  mule  is  supposed  to  be  from  200  to  250  pounds,  but  that 
load  should  be  divided  into  two  parts  and  the  packages  made  of 
suitable  size  for  loading  one  on  each  side  of  the  animal,  prefer- 
ably' oblong  in  shape,  at  most  36  x  24  x  24  inches — not  so  large 
unless  they  contain  light  goods.  A  mule  cannot  carry  more  than 
150  pounds  if  in  a  single  package  to  be  laid  on  his  backbone. 

Bales  for  Export. — Goods  packed  in  bales  should  be  com- 
pressed as  tightly  as  possible.  Professional  packers  in  England 
use  hydraulic  presses,  sometimes  working  on  all  four  sides  at 
once  with  a  pressure  of  as  much  as  two  tons  per  square  inch. 
The  goods  should  first  be  wrapped  in  good  strong  ordinary  pa- 
per, then  a  layer  of  leather  paper  or  sheet  of  canvas,  followed  by 
a  layer  of  tarpaulin  or  oilcloth,  or  possibly  some  good  water- 
proof packing  paper,  and  outside  of  all  double  canvas  or  burlap. 

The  outer  covering  should  be  carefullj^  and  tightly  sewn  with 
heavy  twine,  with  knots  in  the  seam  every  two  inches,  so  that 
breaking  of  the  twine  at  any  point  will  not  permit  the  whole 
covering  to  rip  open.  Sometimes  lags  or  boards  are  used  to  as- 
sist in  keeping  bales  in  their  original  shape,  and  ropes  or  iron 
hoops,  as  many  in  number  as  necessary,  are  used  to  bind  the 
whole  together. 

Necessity  for  Waterproof  Linings. — One  radical  difference  be- 
tween export  and  domestic  packing  is ,  the  invariable  necessity 
of  protecting  goods  for  foreign  shipment  with  wrappings  of  some 
waterproof  material.  There  are  all  sorts  of  contingencies  to  be 
provided  against.  In  the  first  place,  there  is  always  the  damp- 
ness of  sea  air.  Next,  there  is  the  unavoidable  risk  of  sea  spray, 
to  say  nothing  of  a  veritable  drenching.  Again,  at  many  ports 
goods  are  landed  on  open  wharves  or  quays  and  may  lie  exposed 
to  rain  as  well  as  the  hot  tropical  sun  for  days  or  even  for  weeks. 


362  PRACTICAL  EXPORTING 

Yet  again,  there  is  the  risk  from  storms  in  general  transporta- 
tion inland,  even  by  rail.  Box  cars  are  not  so  generally  used  in 
other  countries  as  in  the  United  States.  Open  railway  trucks 
are  much  more  common  and  then,  as  in  transportation  by  cart  or 
on  the  backs  of  animals,  although  tarpaulins  are  spread  against 
rains,  yet  a  soaking  is  none  the  less  possible. 

Kinds  of  Waterproof  Protection. — Waterproof  linings  are 
usually  provided  in  the  way  of  tarred  or  oiled  papers  especially 
prepared  for  this  purpose.  The  English  have  been  rather  fond 
of  using  oilcloth  or  tarpaulin  and  much  more  commonly  than 
Americans  have  utilized  hermetically  sealed  zinc-  or  tin-lined 
cases.  The  latter  are  extremely  desirable  in  shipments  of  goods 
peculiarly  liable  to  damage  from  rain  or  dampness.  Few  export 
quotations  ever  cover  the  cost  of  tin-lined  cases.  When  they 
are  regarded  as  desirable,  although  not  absolutely  essential,  a 
special  price  is  usually  quoted  separately  for  such  packing, 
should  buyers  prefer  to  order  it  instead  of  other  ordinarily  ade- 
quate waterproof  protection. 

Usually  a  case  is  lined  with  strong  waterproof  paper,  inside 
of  which  is  placed  one  or  more  layers  of  ordinary  packing  pa- 
per before  the  goods  themselves  are  packed.  Some  attention  has 
often  to  be  given  to  the  selection  of  suitable  papers,  since  certain 
heavily  oiled  or  tarred  lining  papers  are  likely  to  soil  or  spot 
goods  placed  in  contact  with  them  or  may  at  least  ruin  the  ap- 
pearance of  cartons  in  whiel^  goods  may  be  packed  and  thus  pos- 
sibly affect  the  saleability  of  their  contents.  Packing  in  oilcloth 
or  tarpaulin  is  often  considered  "old-fashioned"  but  may  be  a 
good  plan.  However,  aside  from  the  cost,  such  packing  is  open  to 
the  objection  that  in  some  countries  a  duty  is  charged  on  oil- 
cloth. 

Stuffing  Materials. — Risk  of  possible  damage  from  dampness 
sometimes  affects  the  choice  of  material  used  for  stuffing  neces- 
sarily empty  corners  or  for  protecting  against  chafing.  Straw, 
or  particularly  hay,  is  especially  liable  to  absorb  moisture  and 
hence  should  be  avoided  whenever  dampness  is  likely  to  damage 
goods.  Whether  excelsior,  wood-wool,  straw,  hay,  waste  paper, 
or  other  material  is  selected  will  naturally  depend  upon  the  na- 
ture of  the  goods  and  the  discretion  of  the  shippers,  guided  by 
considerations  like  those  now  suggested. 


PREPARING  SHIPMENTS  363 

Protection  of  Brig^ht  Steel. — Possible  damage  from  moisture, 
raiu  or  sea  water  has  especially  to  be  guarded  against  in  the 
shipment  of  machinery.  All  bright  steel  parts  should  invariably 
be  covered  with  a  thin  layer  of  "slush,"  vaseline  or  grease  of 
some  sort;  steel  moldboards  of  plows  protected  by  a  thin  paint 
easily  scoured  off  and  in  general  any  articles  of  bright  steel 
must  be  protected  against  danger  of  rust  by  the  exercise  of 
every  imaginable  precaution.  In  many  steaming  hot,  tropical 
markets  it  is  impossible  to  display  a  penknife  in  a  shop  window 
unless  it  is  so  thickly  coated  with  grease  as  to  be  unsightly.  The 
effects  of  climate  in  other  parts  of  the  world  are  not  to  be  judged 
from  conditions  we  know  in  the  United  States. 

Strapping  Cases. — ]\Iost  manufacturers  long  ago  learned  the 
necessit}^  of  strapping  cases  which  are  to  be  shipped  even  by 
coastwise  steamers,  here  at  home.  Straps  are  necessarj^  for  at 
least  two  reasons.  (1)  as  protection  against  theft  while  the 
goods  are  lying  on  docks,  etc.,  and  (2)  as  giving  additional 
strength  to  the  packing.  The  straps  used  should  be  continuous, 
extending  all  around  the  packages  and  not  merely  corner  straps. 
They  should  be  intended  to  serve  the  purposes  just  named,  not 
merely  look  like  straps.  It  is  usually  better  to  strap  a  case  in 
all  directions,  not  merely  at  the  ends.  Straps  about  the  middle 
of  cases  both  vertically  and  horizontally  are  often  desirable. 

A  practice  in  vogue  among  shippers  of  fruit  from  Porto  Rico 
and  other  West  India  Islands  is  worthy  of  note.  Boxes  of 
oranges,  grape  fruit  and  pineapples  are  strapped  with  vulcan- 
ized fiber  to  avoid  the  possibility  of  rust  from  iron  straps  spoil- 
ing the  appearances  of  the  package  or  its  contents.  Cement 
coated  nails  are  often  used  in  export  cases  both  on  account  of 
minimizing  rust  stains  and  because  not  so  easily  withdrawn. 
Similarly,  screws  are  frequently  used  instead  of  nails,  particu- 
larly in  the  covers  of  cases,  which  can  then  be  opened  easily  and 
without  damage  in  foreign  custom  houses  to  permit  examination 
of  the  goods,  and  facilitate  secure  reclosing. 

Protection  Against  Pilfering. — Complaints  of  stealing  of 
goods  while  in  transit  are  common  among  foreign  importers. 
Goods  exported  are  peculiarly  subject  to  this  risk.  Cases  must 
lie  in  exposed  places,  in  mountainous  piles  on  docks  where  watch- 
men cannot  observe  each  single  package ;  must  often  remain  for 


364  PRACTICAL  EXPORTING 

considerable  periods  where  not  subject  to  supervision  at  all ;  are 
open,  in  lighters  and  in  the  holds  of  ships,  to  the  approach  of  all 
sorts  of  people.  It  is  extraordinary  with  what  judgment  thieves 
pick  out  cases  containing  articles  easily  abstracted  and  suitable 
for  their  own  uses  or  readily  disposable. 

As  a  protection  against  suspicion  it  is  advisable  that  no  clues 
to  the  contents  of  a  case  be  printed  on  its  exterior.  Such  goods 
as  boots  and  shoes,  jewelry,  wines  and  cigars,  are  especial  favor- 
ites among  thieves,  to  such  an  extent,  indeed,  that  some  steam- 
ship companies  refuse  to  accept  shipments  of  shoes  unless  espe- 
cially protected  against  this  risk  by  wires  about  the  middle  part 
of  a  case,  passed  through  holes  bored  through  the  wood  at  the 
corners  to  prevent  breaking  of  the  wire  at  that  point  and  fas- 
tened by  lead  seals  countersunk  in  the  wood  of  the  case.  Cloth- 
ing and  small  articles  in  general  are  often  extracted  while  cases 
are  in  transit.  A  good  deal  of  ingenuity  is  shown  in  supplying 
the  place  of  the  missing  goods  by  stones  or  bits  of  old  metal  to 
make  up  approximately  the  original  weight  of  the  whole  ease  and 
thus  avoid  suspicion  until  the  goods  have  been  passed  through 
the  custom  house,  duties  paid  and  are  fully  unpacked  in  con- 
signee 's  warehouse. 

One  of  the  favorite  and  most  successful  methods  of  thieves  is 
to  draw  the  nails  out  of  a  case  and  slide  the  inside  board,  gen- 
erally at  the  bottom,  cutting  the  interior  lining,  extracting  the 
contents,  finally  replacing  the  board  in  position  and  re-nailing 
so  that,  to  all  appearances,  the  case  remains  intact.  In  a  cir- 
cular issued  by  the  American  Trading  Company  some  time  ago 
the  suggestion  is  made  that  in  order  to  guard  against  the  possi- 
bility of  withdrawing  boards  in  this  way,  "in  addition  to  the 
usual  strapping,  strong  iron  clips  be  driven  into  the  edge  of  each 
board  and  into  the  ease  at  top,  sides  and  bottom,  and  a  nail 
driven  through  the  same." 

Another  American  export  house  in  a  circular  relating  to  nec- 
essary protection  against  pilfering  writes:  "A  certain  firm, 
after  lining  a  case  with  waterproof  paper,  weighs  the  goods  care- 
fully as  they  are  packed.  They  then  place  inside  a  slip  stating 
that  goods  have  been  checked  twice  and  requesting  that  in  event 
of  shortage  the  contents  be  weighed.  The  case  is  then  iron 
strapped  and  sealed  with  a  lead  seal.     In  addition  a  rubber 


PREPARIXG  SniP3IEXTS  365 

stamp  impression  is  placed  on  the  case  close  to  the  seal  and  the 
same  impression  is  made  on  invoices  reading:  'This  case  has 
been  properly  packed,  marked  and  sealed,  and  we  will  therefore 
not  be  responsible  for  anj^  loss  cansed  by  theft  or  breakage.'  " 

Essential  Particulars  of  Export  Packing. — The  details  of 
suitable  packing  fur  export  as  applying  to  the  thousands  of  ar- 
ticles shipped  from  the  United  States  to  all  parts  of  the  world 
will  vary  according  to  circumstances  in  each  case.  The  essential 
points  which  every  exporter  should  indelibly  impress  upon  his 
memory  are: 

Strong,  whole  cases. 
Thoroughly  waterproof  linings. 
Secure  iron  or  wire  straps. 
Protection  against  pilfering. 

PACKING  FOR  LOCAL  REQUIREMENTS 

Another  consideration  affecting  the  kind  of  export  packing 
that  should  be  supplied  is  suggested  by  the  enquiry :  What  ' 
will  most  please  our  foreign  customers?  What  do  they  require 
in  order  to  do  business  with  us  profitably,  saving  trouble,  ex- 
pense, duties  ?  In  such  regards  a  manufacturer  must  largely 
be  governed  by  the  specific  instructions  given  him  by  his  foreign 
customers.  He  should  always  make  a  point  of  emphasizing  his 
request  for  such  instructions,  but  he  nuist  often  be  guided,  in 
part  at  least,  by  his  own  study  of  conditions  affecting  or  likely  to 
affect  shipments  to  a  given  market.  He  can  learn  a  good  deal 
about  such  conditions  from  information  he  can  obtain  from  the 
Department  of  Commerce  or  the  Pan-American  Union  in  Wash- 
ington, from  other  inquiries  and  investigations  he  may  set  on 
foot,  and  from  consultation  with  other  shippers  to  the  markets 
in  which  he  is  interested,  or  traveling  men  who  have  visited  and 
had  experience  in  such  markets. 

Packing  as  Affected  by  Freight  and  Local  Charges. — The  in- 
terest of  a  shipper  by  no  means  ceases  when  he  has  delivered  his 
goods  to  a  forwarding  agent  or  a  steamship  company  for  trans- 
portation to  his  foreign  customers.  He  should  make  his  cus- 
tomers' interests  his  own.  This  involves  not  alone  securing  the 
best  available  freight  rates,  but  providing  in  every  possible  fash- 


366  PRACTICAL  EXPORTING 

ion  that  c^^arges  on  his  goods  shall  be  the  minimum.  He  must 
reduce  the  weights  and  cubic  dimensions  of  his  packages  so  far 
as  possible  without  endangering  the  safe  and  sound  delivery  of 
their  contents.  We  have  already  noted  how  the  shipment  of 
cases  unnecessarily  large  for  their  contents  may  involve  cus- 
tomers in  paying  ocean  freight  charges  on  empty  space,  which 
on  a  single  shipment  or  in  the  course  of  a  year's  shipments  will 
amount  to  a  considerable  sum  of  money.  '  It  has  been  suggested, 
too,  that  to  facilitate  handling  and  sometimes  interior  transpor- 
tation, cases  be  neither  too  large  nor  too  heavy.  There  are  quay 
dues  which  have  to  be  paid  in  almost  all  ports  of  the  world  and 
often  lighterage  charges.  Those  charges  are  sometimes  per  pack- 
age, not  always  on  the  basis  of  weight.  Hence,  a  multitude  of 
small  light  cases  may  involve  a  good  deal  greater  expense  than 
would  be  necessary  were  ten  or  twelve  such  cases  to  be  strapped 
together  or  made  up  into  a  crate. 

What  to  Pack  Separately. — So  far  as  practicable  a  package 
should  contain  only  one  class  of  goods,  otherwise  there  may  be 
trouble,  or  at  any  rate  delay,  in  many  foreign  custom  houses.^ 
No  catalogues,  pamphlets  or  advertising  matter  of  any  sort 
should  ever  be  enclosed  in  cases  with  goods  unless  specific  in- 
structions have  been  received  to  do  so.  There  are  several  rea- 
sons for  this.  Buyers  do  not  always  want  their  customers  to 
know  all  about  the  manufacturer  from  whom  the  goods  are  re- 
ceived ;  in  many  countries  duties  are  imposed  on  catalogues  and, 
unless  buyers  have  especially  requested  them,  they  will  object 
to  being  forced  to  pay  the  required  taxes.  It  happens  in  some 
countries  that  the  duty  on  printed  matter  is  much  higher  than  on 
some  other  kinds  of  merchandise  and  the  inclusion  of  catalogues 
with  such  other  merchandise  subjects  the  whole  to  the  highest 
rate  of  duty.  Therefore,  shipping  clerks  should  be  peremptorily 
forbidden  ever  to  include  in  export  cases  any  advertising  matter 
unless  instructions  to  the  contrary  are  before  them. 

Packing  as  Affected  by  Import  Duties.— There  is  really  little 
occasion  for  manufacturers  usually  to  pay  any  attention  to  duties 
which  various  foreign  countries  impose.     The  chief  reason  for 

1  The  rule  should  be  to  avoid  packing  into  one  case  two  or  more  kinds  of 
goods,  or  goods  whicli  may  be  subject  to  dififerent  rates  of  duty,  in  sliip- 
ruents  to  any  Latin  American  country. 


PREPARING  SHIPMENTS  367 

any  consideration  of  this  question  at  all  is  the  indication  of  the 
most  desirable  packing  sometimes  to  be  discovered  from  the  man- 
ner in  which  duties  are  imposed.  In  some  countries  all  duties 
are  on  gross  weight.  This  indicates  that  cases  or  other  con- 
tainers should  be  as  light  as  may  be  consistent  with  strength. 
In  some  countries  some  goods  are  dutiable  on  gross  weight  and 
some  on  net  weight.  In  such  instances  it  is  desirable  to  use  care 
in  separately  packing  classes  of  goods  subject  to  the  same  kind 
of  duty,  and  not  mix  them  together  in  one  container.^ 

Net,  Legal  and  Gross  Weights. — Another  consideration  affect- 
ing packing  is  a  term  that  is  quite  strange  to  many  Americans, 
"legal  weight."  This  is  used  in  Mexico,  Argentina  and  other 
Latin- American  Republics  and  some  other  countries;  duties  in 
such  countries  are  sometimes  imposed  on  the  gross  weight  of  the 
goods,  sometimes  on  the  net  weight  and  sometimes  on  the  legal 
weight.  These  terms  are  thus  defined  in  Mexico:  Net  weight 
is  the  intrinsic  weight  of  the  merchandise  alone  without  any 
packing ;  legal  weight  includes  the  interior  wrappings  containing 
the  articles  which  are  packed  with  the  articles  in  the  outside 
container,  for  example,  small  parcels  of  paper,  tin,  glass,  light 
wood,  bottles,  jugs  and  everything  of  that  sort ;  gross  weight  is, 
of  course,  the  weight  of  the  entire  package  as  shipped.     Legal 

1  The  interest  of  manufacturers  in  studying  gross  weights  of  packing  is 
illustrated  in  an  extract  from  a  letter  from  Costa  Rica:  "Manufacturers 
must  understand  that  in  Costa  Rica,  as  well  as  in  some  of  the  neighboring 
countries,  duty  is  charged  on  the  gross  weight  of  the  goods.  Every  pound 
of  weight  that  the  manufacturer  can  save  in  packing  his  goods  is  so  much 
money  saved  his  Central  American  customer  in  the  delivered  cost  of  these 
goods.  It  is  therefore  obvious  that  manufacturers  have  a  personal  and 
selfish  reason  for  taking  particular  pains  that  their  goods  are  packed  right, 
a  reason  resolving  itself  into  satisfied  customers  and  duplicate  orders  in 
the  future.  When  goods  are  packed  in  unnecessarily  heavy  cases,  duties 
will  so  increase  the  cost  of  the  goods  that  they  cannot  be  sold  with  a 
profit;  repeat  orders,  therefore,  will  hot  follow.  One  importer  here  told 
me  of  his  experience  with  certain  cushions  imported  for  the  trolley  cars 
from  the  United  States.  These  cushions  weighed  21  pounds,  the  case 
weighed  60  pounds.  Duty  was,  therefore,  paid  on  81  pounds,  whereas  the 
total  gross  weight  could  easily  have  been  made  30  poimds."  Tlie  extra  cost 
to  the  shipper  of  needlessly  heavy  packing  may  also  be  remarked. 

At  this  writing  all  duties  are  levied  on  gross  weights  in  Colombia,  Costa 
Rica,  Honduras,  Salvador  and  Venezuela.  In  many  other  countries  duties 
on  some  goods  are  by  gross  weight,  on  others  by  net  weight,  ad  valorem 
or  otherwise. 


368  PRACTICAL  EXPORTING 

weight  in  all  countries  making  this  distinction  is  much  the  same 
thing,  namely,  the  net  weight  of  the  naked  goods  plus  the  weight 
of  cartons,  cards  and  other  immediate  packing. 

Some  exporters  have  learned  by  experience  that  on  account  of 
tariff  provisions  such  as  these  a  saving  in  duties  is  effected  by 
shipping  in  one  case  goods  practically  naked,  with  as  little  im- 
mediate individual  packing  as  possible,  and  shipping  in  another 
ease  and  invoicing  separately  the  cartons  or  other  packing  in 
which  the  goods  themselves  are  usually  put  up  for  sale,  or  which 
are  desirable  or  essential  to  improve  sales  when  placed  in  dealers ' 
stocks.  This,  however,  is  only  a  suggestion  and  should  never  be 
attempted  except  as  the  outgrowth  of  experience,  after  a  careful 
study  of  conditions  and  by  agreement  with  customers.^ 

Crating  Together  Small  Packages. — Referring  to  the  often 
desirable  practice  of  crating  together  a  number  of  small  cases, 
a  Special  Agent  of  the  Department  of  Commerce  wrote  in  a  re- 
cent report. from  Guatemala  of  a  shipment  of  safety  matches 
from  a  German  manufacturer  that  "not  only  were  the  goods 
put  up  in  light  tin  boxes  but  the  boxes  were  crated  with  plank. 
The  German  firm  knew  that  the  duty  on  matches  was  rather 
heavy  and  made  an  arrangement  with  the  steamship  people  by 
which  the  planking  was  all  to  be  removed  from  the  matches  and 
only  the  tins  entered  at  the  custom  house,  so  the  buyer  did  not 
have  to  pay  a  high  duty  on  the  planking." 

The  foregoing  report  is  characteristic  of  other  "snap  judg- 
ments" that  have  been  published  from  consuls  and  many  critics 
of  American  practice.  As  a  matter  of  fact  American  and  Eng- 
lish shippers  also  take  advantage  of  the  opportunity  offered  of 
reducing  import  duties  in  such  fashion.  In  all  countries  of 
Latin-America  where  duties  are  assessed  on  gross  weights  it  is 
very  common  practice  for  American  sellers  of  matches,  crackers 
and  other  commodities  shipped  in  tins  and  sometimes  in  other 
small  packages,  to  crate  a  number  of  such  packages  together  and 
arrange  with  the  steamship  company's  agent  to  have  the  ship's 
carpenter  knock  off  the  outside  cover  when  the  vessel  has  arrived 
at  port  of  discharge,  landing  only  the  individual  packages  orig- 

1  In  a  few  Latin  American  countries  poods  shipped  witliout  customary 
wrappiufj  or  ((mtainers  are  subject  to  an  arbitrary  increase  of  weight  on 
which  duties  are  levied. 


PREPARING  SHIPMEXTS  369 

inally  shipped  in  these  crates,  thus  saving  importers  the  duties 
which  would  otherwise  be  charged  on  the  crates  as  well  as  the 
packages  themselves. 

In  such  instances,  the  bill  of  lading  is  usually  made  to  read, 
so  and  so  many  packages  contained  in  such  and  such  a  number 
of  crates.  In  every  instance  specific  and  very  emphatic  instruc- 
tions must  be  given  to  the  ship 's  officers  and  carpenter  by  the 
agents  of  the  ship  at  point  of  departure,  and  the  exporter  must 
take  care  to  make  suitable  arrangements  with  the  agents  before 
the  goods  are  put  on  board. 

CALCULATING  WEIGHTS  AND  MEASUREMENTS 

Exact  statements  of  weights  of  all  export  shipments  are  nec- 
essary for  steamship  purposes  and  because  of  local  conditions  in 
foreign  countries;  of  measurements,  on  account  of  ocean  freight 
charges.  Except  for  Great  Britain,  her  Colonies  and  the  Orient, 
weights  are  invariably  required  to  be  expressed  in  the  metric 
system.  Measurements  of  cases  are  seldom  required  in  anything 
but  feet  and  inches.  Invariable  exactness  in  these  as  in  all  other 
statements  Is  essential.  IMistakes  or  miscalculations  are  punish- 
able by  heavy  fines  on  importers  in  many  markets  where  authori- 
ties assume  that  if  goods  weigh  more  than  the  declared  Aveights 
there  is  an  attempt  to  defraud  the  government,  even  when  the 
variation  is  plainly  a  mistake.  Sometimes  goods  under  these 
conditions  are  actually  confiscated  by  the  authorities.  In  the 
Argentine  Republic  a  leeway  of  only  2  per  cent,  in  the  legal 
weight  is  permitted,  although  not  much  harm  is  done  if  the  de- 
clared weight  is  more  than  2  per  cent,  over  the  actual  weight. 

A  good  deal  depends  on  the  terms  of  the  tariff  regulations  of 
the  country  of  destination  as  to  how  weights  shall  be  calculated 
and  declared.  Instructions  are  or  should  be  given  by  foreign 
customers  in  this  regard.  If  no  such  instructions  are  received 
then  the  exporter  may  consult  regarding  the  tariff  regulations  of 
the  country  in  question  the  Bureau  of  Foreign  and  Domestic 
Commerce,  or  for  Latin  American  countries  the  Pan-American 
Union  at  Washington,  or  he  may  buy  Kelly's  Customs  Tariffs 
of  the  World,  in  which  translations  are  printed  in  condensed  but 
elaborate  form  of  the  regulations,  rates  of  duty,  etc.,  of  all  coun- 


870  PRACTICAL  EXPORTING 

tries.  It  may  be  observed,  however,  that  it  is  possible  to  waste 
hours  and  days  of  perfectly  good  time  in  a  study  which  will 
often  be  fruitless. 

To  save  time  and  wear  and  tear  on  gray  matter  in  figuring 
weights  and  measurements  shippers  always  have  at  their  elbow 
suitable  calculation  books,  immediate  reference  to  which  gives 
accurate  results  without  necessitating  extended  arithmetical 
processes. 

British  Weights  and  Measures. — The  ton  as  used  in  Great 
Britain  and  British  Colonies  generally  is  not  that  ton  to  which 
we  are  accustomed  in  the  United  States.  It  is  the  old  "long"  ton 
of  2,240  pounds,  which,  except  in  a  few  commodities,  long  ago 
went  out  of  use  in  this  country  and  was  supplanted  by  our 
short  ton  of  2,000  pounds.  If  we  quote  to  British  or  British 
Colonial  customers  "per  ton,"  we  must  quote  in  their  tons  and 
not  in  ours,  unless  we  specifically  state  that  our  quotation  is  per 
2,000  pounds. 

The  British  still  commonly  employ  old  divisions  of  their  long 
ton,  namely,  the  hundredweight  of  112  pounds,  the  quarter  of 
28  pounds,  etc.  The  abbreviation  for  hundredweight,  "cwt.," 
is  sometimes  wrongly  used  in  the  United  States  to  represent  100 
pounds.  A  hundredweight  is  not  100  pounds,  it  is  112  pounds, 
and  "cwt."  should  never  be  used  to  represent  anything  else. 
Incidentally,  it  is  to  be  remarked  that  British,  European  and  in 
general  all  foreign  railway  cars  are  small,  light  afi'airs,  as  com- 
pared with  ours.  A  "carload,"  which  in  the  United  States  may 
be  from  18  to  50  tons,  will  in  most  foreign  countries  be  figured 
as  from  10  to  15  tons  only. 

Another  British  measure  which  differs  from  our  American 
standard  is  the  gallon.  The  British  use  the  Imperial  gallon, 
which  is  one-fifth  larger  than  our  American  measure,  as  are  nat- 
urally the  divisions  of  their  gallon,  quarts  and  pints.  In  for- 
eign trading,  it  is  necessary  that  the  exact  kind  of  measure  and 
weight  that  is  used  be  clearly  expressed. 

The  Metric  System. — The  metric  system  of  weights  and  meas- 
ures is  generally  employed  throughout  the  world  excepting  in 
Great  Britain  and  the  British  Colonies  and  in  the  Far  East  and 
Middle  East.  It  is  only  necessary  for  the  exporter  t-o  under- 
stand the  principles  of  the  system,  familiarize  himself  with  the 


PREPARING  SIIIPME^\TS  371 

names  of  the  various  terms  and  commit  to  memory  the  equiva- 
lents of  the  standard  denominations  for  length,  weight,  capacity, 
etc. 

He  should  have  available  for  quick  reference  a  set  of  metric 
conversion  tables  to  which  he  can  turn  in  a  moment  and  find  the 
exact  equivalent  in  our  common  denominations  of  a  metric  quo- 
tation, or  find  the  equal  in  the  metric  system  of  an  American  de- 
nomination. A  busy  man  has  no  time  to  waste  in  attempting 
to  figure  these  equivalents  for  himself.  The  chief  things  which 
he  must  know,  which  he  ought  to  commit  to  memory,  are : 

The  meter  is  equal  to  39%  inches. 

The  foot  is  equal  to  30 V^  centimeters. 

The  kilogram  is  equal  to  2^  pounds. 

One  pound  is  equal  to  little  less  than  half  a  kilogram. 

One  liter  is  equal  to  little  less  than  one  quart. 

One  pint  is  equal  to  little  less  than  half  a  liter. 

Metric  Standards. — The  exporter  must  remember  that  all  the 
old  tables  he  learned  at  school,  avoirdupois  and  Troy  weight, 
the  foot  and  the  yard,  the  quart  and  the  pint,  and  everything 
else  connected  with  our  common  system,  have  nothing  in  com- 
mon with  the  metric  system,  are  not  even  distantly  related  to  it. 
First  to  be  learned  are  the  names  of  the  metric  standards : — the 
meter,  the  standard  of  length ;  the  liter,  the  standard  of  ca- 
pacity; the  gram,  the  standard  of  weight. 

When  the  system  of  multiples  and  divisions  of  the  metric 
standard  denominations  are  understood,  the  system  presents  no 
difficulties.  The  prefixes  employed  are  the  more  easily  under- 
stood if  one  has  studied  6;*eek  and  Latin. 

Greek  prefixes  are  used  when  the  standard  is  to  be  multiplied. 
Thus,  dcka  means  ten  times,  hecto  a  hundred  times,  kilo  a  thou- 
sand times.  A  kilometer,  is,  therefore,  a  thousand  meters;  a 
kilogram,  a  thousand  grams. 

Latin  equivalents  for  10,  100  a^id  1,000  are  employed  to  indi- 
cate division.  Deci  means  a  tenth,  centi  a  hundredth,  milli  a 
thousandth.  A  centimeter,  therefore,  is  one  one-hundredth  of  a 
meter ;  a  millimeter,  one-thousandth  of  a  meter. 

The  principal  denominations  of  the  metric  system  in  every  day 
use  are  the  following:  In  measures  of  length,  the  meter  with  its 
multiple  the  kilometer,  and  its  subdivision  the  centimeter-     In 


372  PRACTICAL  EXPORTING 

measures  of  weight :  The  gratn,  but  more  especially  its  multiple 
the  kilog7-am  and  its  subdivisiou  the  centigram,  lu  measures  of 
capacity :     The  liter  and  the  hectoliter. 

How  Metric  Denominations  Are  Used. — A  kilometer  is  used 
to  express  long  distances,  when  we  speak  of  miles.  A  meter  is 
used  to  measure  the  length  of  pieces  of  cloth,  of  a  wall,  etc.  Cen- 
timeters are  used  to  express  the  width  of  a  piece  of  cloth,  the 
size  of  a  pane  of  glass,  etc.,  while  the  millimeter  is  most  com- 
monly employed  to  measure  the  thickness  of  articles  such  as  wire, 
sheet  iron,  a  pane  of  glass,  etc. 

Square  meters  are  used  to  express  the  area  of  a  room,  square 
kilometers  express  the  area  of  a  country  where  we  usually  em- 
ploy the  term  square  miles,  but  in  the  measurement  of  land  an- 
other measure  is  used  called  the  are  which  is  equal  to  100  square 
meters.  The  most  common  use  of  this  term,  however,  is  in  its 
multiple,  the  hectare,  100  ares  (10,000  square  meters)  which  is 
used  "chiefly  in  the  measurement  of  farm  properties  as  we  em- 
ploy the  term  "acre."  A  hectare  is  equivalent  to  nearly  2i/2 
acres. 

The  metric  measurements  of  capacity  are  almost  exclusively 
used  in  the  measurement  of  liquids.  The  liter  is  the  standard, 
measuring  a  little  less  than  our  quart.  The  most  important  of 
the  other  measures  of  capacity  is  the  cubic  centimeter,  "c.c. " 
as  we  call  it  sometimes,  expressed  in  the  proper  nomenclature  of 
the  system  as  the  centiliter. 

In  measures  of  weight  the  gram  and  the  centigram  are  used 
for  very  small  commodities,  but  the  kilogram,  equal  to  2^^ 
pounds,  is  the  demonination  most  commonly  encountered.  It  is 
to  be  noted  that  in  countries  using  the  metric  system  many  dry 
commodities  which  we  sell  and  buy  by  measure,  e.g.,  by  quart  or 
bushel,— vegetables,  grain,  etc., — are  usually  sold  by  weight,  not 
by  measure. 

The  problem  of  multiplying  and  dividing  denominations  in  the 
metric  system  presents  no  difficulties  to  an  American  if  he  will 
keep  in  mind  the  decimal  system  on  which  our  own  currency  is 
founded  and  forget  the  12  ounces  to  the  Troy  pound  and  16 
ounces  to  the  pound  avoirdupois.  Metric  weights  and  measures 
are  multiplied  and  divided  just  as  are  our  dollars  and  cents. 


PREPARING  SHIPMENTS  373 

Moving  the  decimal. point  a  notch  in  one  direction  or  the  other 
multiplies  or  divides  by  ten. 

Rough  Equivalents  of  Metric  Denomination. — The  equivalent 
of  the  kilometer  in  miles  is  easily  arrived  at  by  memorizing  the 
rough  equivalent,  8  kilometers  to  5  miles. 

The  equivalent  of  the  meter  may  be  memorized  by  thinking 
of  three  threes,  namely  3  feet  o|<j  inches. 

The  pound  may  be  roughly  called  a  half  kilogram  although 
actually  a  little  lighter. 

For  quick  and  rough  conversion  of  pounds  to  kilograms,  the 
official  Cuban  method  may  be  adopted,  that  is,  pounds  are  multi- 
plied by  "^/loo;  although  this  results  in  making  the  amount  in 
kilos  a  little  less  than  the  actual  weight.  Another  quite  as  easy 
"rule  of  thumb"  is  to  deduct  10  per  cent,  from  pounds  and  di- 
vide remainder  by  2  to  get  kilos.  "Kilo"  is  the  colloquial  ab- 
brevation  for  kilogram  and  never  applies  to  any  other  denomina- 
tion. 

Cubic  Measurements. — As  we  shall  shortly  have  occasion  to 
learn,  the  cubic  measurement  of  cases  is  an  important  factor  in 
ocean  shipping.  It  is  always  necessary  to  know  and  to  state 
the  measurements  of  cases  or  other  packages  in  which  export 
goods  are  despatched.  The  length,  breadth  and  thickness  have 
to  be  stated  in  several  different  connections  and,  although  it  is 
not  necessary  in  stating  these  dimensions  to  give  at  the  same  time 
the  result  of  their  multiplication  in  cubic  feet,  yet  the  exporter 
should  know  this  result  for  his  own  information  and  guidance. 
It  is  necessary  for  him  to  know  it  whenever  he  quotes  C.I.F. 
prices.  Results  of  the  multiplication  of  the  dimensions  are 
easily  and  quickly  available  in  books  of  tables  which  are  pub- 
lished for  the  purpose. 

If  the  exporter  wishes  to  perform  the  operation  for  himself 
it  is  purely  a  question  of  arithmetic  perhaps  most  easily  carried 
out  by  reducing  the  length,  breadth  and  thickness  from  feet  and 
inches  to  inches,  multiplying  the  length  by  the  breadth  and  the 
result  by  the  depth,  giving  a  total  of  cubic  inches.  Dividing 
this  total  by  1,728  cubic  inches  to  the  cubic  foot  one  arrives  at 
a  result  in  cubic  feet.  It  should  be  noted,  however,  that 
fractions  of  a  cubic  foot,  that  is,  the  remainder  left  after  the  di- 


374  PRACTICAL  EXPORTING 

vision  has  been  made,  are  not  expressed  in  the  fraction  by  plac- 
ing the  remainder  over  the  divisor.  It  is  expresed  in  twelfths 
of  a  cubic  foot,  arrived  at  by  dividing  the  remainder  jnst  re- 
ferred to  by  144    (^oth  of  1728).     Thus,  the  cubic  measure- 

1152 
ment  of  a  case  is  never  expressed  9  •      ■  ■  but  would  be  written 

172o 

9^,  commonly  or  colloquially  spoken  "9  ft.  8  inches."  Length 
breadth  and  depth,  expressed  in  feet  and  inches  may,  of  course, 
also  be  multiplied  together  by  the  duodecimal  system,  if  pre- 
ferred. 

In  taking  the  measurement  of  a  package  the  extreme  measure- 
ment in  each  direction  has  to  be  calculated.  If  there  is  a  knob 
or  point  or  similar  projection,  the  measurement  over  all  is  that 
which  has  to  be  figured.  It  is  the  diameter  of  a  barrel  at  the 
bilge  and  not  at  the  head  on  which  calculations  of  that  barrel's 
cubic  measurements  are  based. 

MARKING  AND  ADDRESSING  PACKAGES  FOR  EXPORT 

Cases  for  foreign  shipment  are  not  addressed  to  customers  by 
their  names  in  full.  Symbols  are  used.  Reasons  for  this  prac- 
tice include :  quicker  identification  of  packages  on  docks,  in  the 
ship's  cargo,  in  loading  and  unloading,  in  shipping  manifests; 
abbreviation  in  the  writing  of  documents,  bills  of  lading,  mani- 
fests, etc. ;  and  finally  secrecy,  concealing  the  actual  names  of 
the  consignees  both  from  observers  at  this  end  and  from  com- 
petitors of  consignees  at  the  other  end. 

In  some  foreign  countries  mistakes  in  marking  are  very  costly 
to  the  importer.  For  instance,  in  a  country  where  it  is  pre- 
scribed that  each  package  of  a  shipment  shall  receive  a  serial 
number,  all  goods  bearing  duplicate  numbers  may  be  subject  to 
a  heavy  fine  in  the  form  of  increased  duties. 

Necessary  Marks. — None  but  the  absolutely  necessary  marks 
should  appear  on  export  cases.  If  second  hand  cases  are  used, 
all  old  marks  should  be  thoroughly  erased.  Anything  save 
the  essential  particulars  serves  only  to  confuse.  Advertising 
matter  on  the  exterior  of  cases  for  foreign  shipment  is  almost 
always  useless  as  advertising,  gives  a  clue  to  thieves  as  to  the 
contents  of  the  case  and  preferably  should  be  omitted.     The  re- 


PREPARING  SHIPMENTS  375 

quired  marks  should  not  only  be  legible  but  they  should  be 
prominent  and  ineffaceable  under  all  conditions.  Their  arrange- 
ment on  the  surface  of  the  package  should  be  such  as  to  facili- 
tate rapid  handling. 

The  essential  marks  are :  the  symbol  or  device  of  the  consignee ; 
the  name  of  the  port,  usually  placed  underneath  the  symbol ;  the 
serial  number  of  the  case;  the  gross  and  net  weights  in  pounds 
or  in  kilos  or  in  both,  as  may  be  required ;  sometimes  the  meas- 
urement of  length,  breadth  and  thickness  of  the  package  in  feet 
and  inches. 

The  Consignee's  Mark. — The  symbol,  which  represents  the 
consignee  and  which  is  often  arranged  by  him,  may  be  written 
in  a  great  variety  of  forms.  It  usual]}-  consists  of  one  of  several 
letters  either  alone  or  in  conjunction  with  a  diamond,  a  triangle, 
a  square,  a  circle,  a  heart,  or  some  similar  design.  The  following 
are  typical  examples  of  such  symbols  as  employed  in  export 
shipping:     Such  symbols  identify  the  consignee  and  sometimes, 


A 


C  XXD 


489 


MELBOURNE       SHANGHAI     VALPAHAISO 


as  in  the  illustration  of  the  mark  for  Valparaiso,  include  a  num- 
ber which  refers  to  the  number  of  the  order  or  indent,  or  some 
other  identification  chosen  by  the  consignee.  The  letters  used 
may  be  the  initials  of  the  firm  name  or  others  arbitrarily  chosen, 
perhaps  designed  to  give  no  clue  to  the  consignee. 

The  Port  Mark. — The  port  mark  is  really  the  most  essential 
of  all.  By  port,  however,  is  not  necessaril}^  meant  the  actual 
seaport.  It  is  the  term  used  to  indicate  the  ultimate  point  of 
destination.  Goods  intended  for  a  customer  in  Santiago,  Cldle, 
should  not  be  marked  Valparaiso  (in  the  absence  of  special  in- 
structions so  to  mark)  simply  because  Valparaiso  is  the  port  and 
the  terminus  of  the  ship's  voyage.  The  port  mark  should  be 
clear  and  distinct  and  written  in  larger  characters  than  any  other 
marks.     The  whole  symbol  should,  when  possible,  measure  from 


376  PRACTICAL  EXPORTING 

12  to  15  inches  across.     The  port,  name  in  letters  2i/)  inches  high. 

Package  Numbers. — Serial  numbers  are  given  to  the  cases  of 
a  shipment,  usually  placed  alongside  of  such  symbols  as  those 
above  illustrated.  Instructions  may  be  received,  for  example,  to 
"number  cases  from  10  up."  This  means  that  one  case  is  to  be 
numbered  10,  another  11  and  so  on.  There  must  be  no  dupli- 
cates in  these  numbers,  nor  must  any  number  be  omitted.  If 
two  cases  arrive  in  a  foreign  custom  house  bearing  the  same  num- 
ber immediate  suspicion  is  aroused  of  an  attempt  to  defraud  the 
customs.  If  one  number  in  a  series  has  been  passed  over,  the 
consignee  is  naturally  fearful  that  a  case  has  been  lost. 

Exactness  of  all  Marks. — Extreme  care  must  be  taken  in 
noting  the  gross  and  net  weights  of  cases,  as  has  already  been 
suggested.  They  must  be  as  accurate  and  exact  as  the  most 
careful  weighing  can  make  them  and  like  all  other  marks  must 
correspond  letter  for  letter  with  marks  given  on  invoices  and 
consular  documents,  otherwise  heavy  fines  are  likely  to  result 
with  endless  inconvenience  and  great  delay,  because  the  contents 
then  have  to  be  taken  out  and  weighed  separately  in  custom 
house  at  port  of  destination.  Unless  the  shipper  is  in  constant, 
continuous  touch  with  a  given  market  he  will  do  well,  when  ready 
to  despatch  each  separate  shipment,  to  inquire  as  to  all  the 
formalities  required  in  marking,  as  well  as  in  other  regards, 
of  the  nearest  consul  in  the  United  States  of  the  country  in 
question.  For  example,  certain  countries  require  that  marks 
appear  on  more  than  one  side  of  a  case. 

Warning  Marks  Useless.— Familiar  phrases  like  "Handle  with 
care,"  "This  side  up,"  "Keep  dry,"  "Fragile,"  "Stow  away 
from  boilers,"  may  usually  just  as  well  be  omitted.  They  have 
no  appreciable  effect  on  longshoremen  anywhere  and  when  cases 
go  to  a  country  where  some  other  language  is  spoken  such  in- 
structions in  English  carrj'-  no  weight  whatever,  unless  it  is 
"fragile"  which  is  much  the  same  word  in  several  languages.  It 
is  the  shipper  himself  who  must  provide  against  all  contingencies 
and  so  pack  goods  that  it  will  not  matter  whether  they  are 
handled  carefully,  go  right  side  up,  or  get  wet.  In  exceptional 
cases  where  it  is  thought  that  some  effort  must  be  made  to  try  to 
secure  especially  favorable  treatment  for  goods,  legends  of  this 
sort  may  be  used ;  but  if  so,  they  should  be  written  not  only  in 


PREPARING  SHIPMENTS  377 

English  but  iu  appropriate  foreign  languages.  As  a  rule,  how- 
ever, such  instructions,  like  any  other  marks,  often  serve  to  ob- 
scure the  essential  feature,  that  is,  the  symbol  and  tlie  port  mark. 
How  Marks  Are  Applied. — Crayon  marks,  tags  or  cards 
should  never  be  used  in  export  shipping.  INIarks  should  pref- 
erably be  applied  by  a  stencil ;  in  default  of  stencil,  painted  on 
by  a  brush  and  indelible  ink.  They  must  not  only  be  prominent 
and  recognizable  at  a  glance,  but  they  must  be  ineffaceable,  not 
likely  to  be  washed  away  or  blurred  by  rain  or  sea  water,  or 
rubbed  off  by  abrasion  with  other  cases.  The  stencil  insures 
clearness  and  legibility  and  may  be  used  even  for  the  special 
symbols  adopted  by  foreign  customers.^  Sometimes  a  little  in- 
genuity is  required  in  devising  satisfactory  ways  of  marking. 
For  example,  the  question  of  how  to  paint  marks  on  iron  and 
steel  girders,  etc.,  to  guard  against  smearing  and  to  be  water- 
proof is  one  that  has  puzzled  many  shippers. 

INVOICING  EXPORT  GOODS 

Ordinary  domestic  invoice  forms  may  do  for  export  business 
at  the  start,  but  with  the  development  of  that  branch  of  trade  to 
large  proportions,  involving  many  shipments,  it  will  very  likely 
become  desirable  to  print  special  export  forms.  Appropriate 
places  may  be  provided  for  several  necessary  features  in  such 
invoices  that  are  not  required  in  the  home  trade. 

Every  export  invoice  should  be  prepared  in  triplicate,  at  least, 
and  possibly  more  than  three  copies  will  be  required  in  some 
cases.  If  invoices  are  cashed  by  banks,  those  institutions  will 
require  at  least  two  copies  of  the  invoice,  while  an  extra  copy 
should  be  forwarded  direct  to  foreign  customer.- 

It  may  here  be  noted  that  the  contents  of  the  invoice  should 
also  be  epitomized  in  an  accompanying  letter,  or,  better  still,  in 

1  Stencil  marking  is  obligatory  in  all  shipments  to  Chile,  or  to  Bolivia 
by  way  of  Chilean  ports.  Marks  (either  brush  or  stencil)  including  name 
of  steamer  must  appear  on  two  adjacent  sides  of  each  package  shipped  to 
Argentina. 

2  Here  it  should  be  noted  that  our  common  colloquial  use  of  the  word 
"bill"  instead  of  "invoice"  is  not  only  incorrect  but  is  likely  to  lead  to 
misunderstandings  if  employed  in  correspondence  with  foreign  customers. 
Tliey  understand  by  "bill" — bill  of  excliange,  i.e.,  a  draft.  We  speak  of 
some  paper  money  as  "bills" — the  English  people  all  over  the  world  call 
them  "bank  notea." 


378  PRACTICAL  EXPORTING 

a  letter  sent  in  advance  of  shipment.  Such  letter  should  give 
any  ne(;essary  information  on  points  that  are  not  elaborately 
explained  in  the  invoice  itself,  and  should  invariably  repeat  such 
essential  details  as  the  name  of  the  steamer  and  the  date  of  its 
sailing,  if  possible  with  expected,  approximate  arrival  date  at 
destination,  if  the  boat  is  a  tramp  or  irregular  liner,  or  if  there 
is  to  be  transshipment. 

In  some  instances,  owing  to  financial  and  other  arrangements, 
the  documents  such  as  bill  of  lading  and  invoice  cannot  be  sent 
forward  at  the  same  time  as  the  goods,  and  possibly  the  next 
following  steamer  may  not  sail  for  some  time.  In  such  cases  it 
is  better  to  arrange  to  send  even  an  incomplete  invoice,  i.e.,  an 
invoice  with  charges  to  follow,  accompanied  by  copy  of  the  bill 
of  lading,  by  the  steamer  which  takes  the  goods  and  to  subordi- 
nate the  financial  arrangements  to  this  plan.  The  essential 
features  of  an  export  invoice  should  be  memorized  by  the  export 
manager.  On  no  account  should  an  invoice  be  despatched  until 
it  has  been  checked  by  a  person  other  than  the  one  who  first 
wrote  it. 

Clearness  in  Export  Invoices. — Once  more,  absolute  unvary- 
ing exactness  must  here  be  emphasized.  Errors  of  omission  or 
commission  in  the  export  invoices  may  be  far  worse  than  annoy- 
ing or  perplexing  to  one's  foreign  customer.  They  may  involve 
him  in  heavy  fines.  Moreover,  here  again,  simple,  clear  lan- 
guage is  positively  essential.  The  descriptions  of  the  goods  in- 
voiced must  be  full  and  explicit,  without  abbreviations  or  trade 
terms.  They  must  leave  nothing  to  guesswork  or  the  imagina- 
tion. The  mere  fact  that  the  printed  part  of  a  manufacturer's 
invoice  declares  him  to  be  a  maker  of  hosiery  should  not  be 
assumed  to  be  sufficient  to  identify  the  goods  invoiced  as  hosiery. 
For  aught  foreigners  in  custom  houses  or  other  positions  may 
know  the  hosiery  manufacturer  may  be  shipping  chairs,  or  hard- 
ware, or  livestock. 

The  dollar  mark  ($)  should  precede  all  prices,  extensions  and 
footings.  Importers  and  foreign  custom  houses  receive  invoices 
in  many  different  currencies;  no  room  for  doubt  should  be  given 
as  to  that  in  which  goods  are  priced. 

The  abbreviations  so  often  used  by  bookkeepers  in  making 
out  invoices  for  the  home  trade  are  frequently  enigmas  to  the 


Invofce  K 

CodeWorJSTE      &    WHYTE  . 

"Whole 

It_ .  by  order  of 


Ma 


H 


H  Vsd  May  18 


LI  VI 

IN 

OAse 

NO. 

GRC 

1 

1 

■ —  

1 

r 

£a 

Lt 

1-3 

e 

$14^ 

0( 

?93 

60 

-4-5 

10 

36( 

0( 

P34 

00 

7-8-9 

35 

153C 

0( 

S988 

00 

10 

47- 

$331 

50 

11 

2, 

No   cl 

.ar^ 

e 

12 

i 

No   ct 

^a 

a 

$1647 

10~ 

*  TO    D 
CODE    WOI 

<!f  0.£. 

ADDRESS 

TRIPLE*. 

lOUIVAlC^ 

^^^]VrE,<&  WHYTE 

""* »Cr»i6£i« 

Invorce  No   6224 
Code  Word  Rfipresentil^ 

UCtR  

Jtfaris  and  J^umbers 


Invoice  of      merchandise 

fer S.S.    "ADRIATIC 

and/c 


Skipped  by  BROWNE,  Greene   a  whyte, 

/!.r___ by  ordir  of 


t  and  risk  ^Harrison,    Post,    Hathaway  &  Co., Liverpool  there_ 
nd  ccmsigned  lo Order 


Your  I-ndrnt       «31     dated  May  IB 


2  only 

3  only 

4  only 
1   only 


"Pluperfect"  Gasoline  Engines 
Leaa  35;5 

"Pluperfect"   Gaaoline  Engines 


Portable  Casoli 
Repair  Parts 


Value  5110.25 


U.S.  Gold,  $    -1647.10 la  £xch.  {4.82  —    £341.14.7. 

New  York, Aujjuat  31 it^ 


^93 
36(j    Olj)     ^234 

?98a 

?331 

IIo   cl  ar, 
"o  cl  9ir, 


E  Cf  O,  £. 
BRgWJflE^BEENE,  &  WHYTE 


Form  4 — Export  Invoice. 


c 


PREPARING  SHIPMENTS  379 

trade  in  our  own  country  and  absolutely  unintelligible  to  any 
one  outside  the  trade.  One's  foreign  customers  cannot  be  ex- 
pected to  guess  what  even  the  commonest  abbreviations  used  in 
the  trade  of  the  United  States  may  represent.  No  harm  cer- 
tainly is  done  if  it  is  necessary  to  fill  two  lines  of  an  invoice  with 
a  full  description  of  the  article  shipped  instead  of  condensing  it 
by  means  of  abbreviations  into  half  a  line.  Foreign  customers 
will  be  thankful  for  the  fuller  expression. 

Exactness  in  Invoice  Details. — Invoice  descriptions  must  be 
honest  and  exact.  All  widths,  lengths,  weights,  etc.,  stated  on 
invoices,  stamped  on  the  goods,  or  printed  on  cartons  or  labels, 
must  be  actual  and  not  nominal,  no  matter  what  "trade  custom" 
may  be,  or  how  customary  exaggerations  or  euphemisms  may  be 
discounted  or  understood  in  this  country.  Moreover,  the  whole 
invoice  must  be  in  one  hand  writing  or  if  written  on  the  type- 
writer must  be  uniform  throughout.  Corrections,  interlinea- 
tions, additions,  must  conform  to  the  style  of  the  whole. 

Manufacturers  will  often  be  approached  by  some  foreign  cus- 
tomers with  a  request  that  special  invoices  be  supplied  for  cus- 
tom house  purposes  on  which  values  or  totals  will  appear  in 
greatly  reduced  form,  or  sometimes  customers  will  request  blank 
invoice  forms  from  the  manufacturer  in  order  that  they  them- 
selves may  make  out  special  invoices  to  be  presented  to  the  cus- 
tom house.  No  self-respecting  exporter  should  accede  to  re- 
quests of  this  nature.  He  ought  not  to  become  a  partner  in  such 
an  operation,  and  he  ought  not  to  lend  the  appearance  of  his 
name  to  such  an  attempt.  Yet,  he  should  not  necessarily  regard 
the  customer  making  such  a  request  as  a  scamp.  Under-valua- 
tions  in  a  good  many  countries  are  so  much  the  established  rule 
that  they  are  locally  looked  upon  as  entirely  rhoral,  if  not  praise- 
worthy. 

Necessary  Particulars  in  Invoices.^ — All  foreign  invoices 
should  include  among  other  details  the  following :  The  number 
or  date  of  indent  or  order;  the  mode  and  route  by  which  the 
goods  are  forwarded ;  the  marks,  numbers  and  nature  of  pack- 
ages (case,  box,  crate,  barrel,  bag,  sack,  bale,  etc.)  ;  the  terms  of 
carriage,  F.O.B.    (free  on  board),  CI.F.    (cost,  freight,  insur- 

1  See  Form  4.  ^ 


380  PRACTICAL  EXPORTING 

ance),  etc.  Reference  is  often  made  to  other  particulars  such  as 
insurance,  arbitration  in  case  of  dispute,  etc. 

In  addition  to  a  number  or  other  means  of  identifying  a  given 
invoice,  it  will  often  prove  useful  to  give  each  a  distinctive  code 
word.  This  facilitates  cable  references  to  it,  as  do  code  words 
often  assigned  each  item  of  an  invoice.  With  such  code  words 
repeat  orders  by  cable  are  easy.  Of  course  all  must  be  duly  and 
permanently  registered  in  some  appropriate  record,  both  to  avoid 
duplication  of  the  words  and  to  enable  quick  reference  and 
identification. 

Every  item  included  in  a  shipment  must  be  invoiced.  Even 
if  no  charge  is  made  by  the  shippers,  still  custom  houses  at-  ports 
of  destination  may  impose  duties.  Quantities  of  catalogues 
should  appear  on  the  face  of  the  invoice  with  statement  of  their 
weight ;  so  should  advertising  electrotypes.  Spare  or  extra  parts 
or  accessories,  not  properly  forming  part  of  a  whole,  even  if  no 
charge  is  made  for  them,  must  appear  in  the  invoice  with  state- 
ment of  their  weight  and  value — although  the  latter  is  not  car- 
ried into  the  extensions  when  payment  is  not  expected. 

All  marks,  numbers,  etc.,  repeated  on  the  invoices  must  corre- 
spond letter  for  letter  with  marks  on  cases.  The  gross  and  net 
weights  of  each  package  must  be  given.  Opposite  each  item 
there  should  be  indicated  the  number  of  the  case  in  which  it  is 
packed.  Usually  it  is  desirable,  sometimes  necessary,  to  invoice 
together  all  goods  packed  in  a  certain  case,  with  note  of  its 
gross  and  net  weights  and  the  value  of  the  package  as  a  whole, 
besides,  of  course,  the  value  of  each  article. 

When  several  packages  or  boxes  are  strapped  or  bound  to- 
gether so  as  to  form  one  package  (e.g.,  small  cases  of  codfish)  in 
addition  to  the  gross  weight  of  the  whole  package,  the  gross  and 
net  weight  of  each  smaller  package  should  also  be  stated.  This 
docs  not  apply  to  articles  shipped  in  bulk  customarily  bound  into 
bundles  like  staves  or  handles. 

Invoice  Details  for  Special  Markets,— In  the  case  of  goods 
sliipped  to  Australia,  New  Zealand  or  South  Africa,  it  is  neces- 
sary to  show  on  the  invoice  the  cost  of  boxing  or  crating,  of  cart- 
age from  factory  to  railway  station  and  the  freight  from  local 
station  to  port  of  shipment.  This,  no  matter  whether  manufac- 
turers' quoted  prices  include  all  these  particulars  and  cover  de- 


PREPARING  SHIPMENTS  381 

livery  at  port.  Under  the  laws  of  these  Colouies  these  several 
conipoueut  parts  of  the  eost  of  the  goods  must  appear  on  the 
invoice ;  the  actual  factory  cost  of  the  goods  must  be  shown,  plus 
these  several  other  items.^  Customs  authorities  of  the  Colonies 
named  are  empowered  to  refuse  entry  of  goods  which  are  not 
accompanied  by  such  proper  documents.  Special  details  are  also 
required  for  some  other  markets,  particularly  in  connection  with 
"consular  invoices"  which  will  be  considered  in  another  chapter. 

Totals  and  Signatures.— All  discounts  should  be  deducted  on 
the  face  of  the  invoice,  even  the  cash  discount  if  any  has  been 
quoted ;  but  no  discount  must  be  called  "cash"  or  "export."  It 
is  a  good  plan  in  shipping  to  many  countries  to  make  the  ex- 
tensions of  the  value  of  contents  of  each  case  net,  that  is,  deduct 
the  appropriate  discounts  in  each  extension  covering  items 
packed  into  one  case,  so  that  its  exact  value  will  be  shown. 

If  necessary  to  convert  the  value  of  an  invoice  into  some 
foreign  currency,  that  conversion  is  usually  made  at  the  foot  of 
the  invoice  where  the  total  in  dollars  and  cents  is  turned  into 
foreign  money  at  a  rate  of  exchange  whieli  is  stated. 

All  foreign  invoices  should  invariably  be  signed  by  some  one 
connected  with  the  house  in  an  official  capacity  and  having  au- 
thority to  afifix  the  firm  or  company  signature.  In  many  coun- 
tries invoices  have  no  legal  force  unless  so  signed. 

It  is  customary  to  sign  invoices  at  the  foot,  preceded  with  the 
expression  "E.  and  O.E."  (errors  and  omissions  excepted). 
This  is  purely  a^  matter  of  form,  intended  to  reserve  to  the 
shippers  the  right  to  rectify  any  errors  or  omissions.  Legally  it 
is  of  no  effect  whatever,  as  every  invoice  or  statement  of  account 
is  only  presumptive  evidence  and  in  case  of  dispute  must  be 
proven.  None  the  less,  following  long  established  custom,  so 
signing  will  be  an  indication  of  familiarity  with  export  practice. 

SUNDRY  DOCUMENTS 

Referring  now  to  the  bookkeeping  or  invoicing  department  of 
the  office,  there  are  sundry  papers  other  than  the  invoice  which 
should  accompany  export  shipments  for  tlie  information  or  assist- 

i  See  reverse  of  Form  2.  Instructions  as  to  invoices  for  Australia  may 
lie  procured  from  the  Repiesentative,  Australian  Customs,  New  York;  as 
to  invoices  for  New  Zealand  and  South  Africa,  from  any  British  Consul. 


382  PRACTICAL  EXPORTING 

ance  of  customers.  The  slight  care  aud  work  involved  in  put- 
ting all  into  acceptable  shape  will  be  amply  repaid  by  the  cus- 
tomer's increased  satisfaction  in  doing  business  with  us.  Sev- 
eral copies  of  the  invoice  are  required  because  most  shipments  are 
financed  through  banks  which  require  at  least  two  copies,  while 
another  should  be  sent  direct  to  customer.  Duplicates  at  least, 
if  not  triplicates,  of  all  the  other  papers  should  be  prepared, 
although  they  may  or  may  not  accompany  the  more  essential 
papers  passed  through  banks.  Duplicates  are  required  in  order 
to  forward  direct  to  customers  by  separate  mails  to  guard  against 
risk  of  loss. 

Statement  of  Charges.^ — Invoices  should  show  merely  the  cost 
of  goods.  It  must  never  be  forgotten  that  they  are  to  be  em- 
ployed by  importers  of  other  countries  in  clearing  purchases 
through  their  custom  houses.  There  are  almost  always  other 
items  which  have  to  be  charged  to  foreign  customers  which  are 
not  included  in  the  quoted  prices  of  goods.  These  charges  should 
appear  in  a  separate  document  which  may  be  called  a  Statement 
of  Charges.  It  will  include  the  invoice  totals  plus  these  other 
charges,  the  grand  total  representing  the  whole  indebtedness  of 
the  customer  in  the  transaction  covered. 

These  other  charges  which  have  been  prepaid  for  the  account 
of  a  customer  may,  for  example,  include :  cartage,  railway  freight, 
possibly  extra  packing,  when  these  items  are  not  included  in  the 
invoice  costs;  the  ocean  freight  charges,  which  almost  always 
have  to  be  prepaid ;  premium  of  marine  insurance ;  possibly 
petties,  such  as  cablegrams  or  cost  of  postage,  although  as  a  rule 
it  is  best  to  avoid  trifling  charges  of  such  nature.  Statement  of 
charges,  when  required  and  when  it  serves  to  represent  the  total, 
that  is,  the  sum  for  which  the  manufacturer  is  drawing  a  draft 
against  the  foreign  customer,  must  also  accompany  invoices  which 
are  passed  through  bankers'  hands. 

Packing  List  or  Measurement  Note.- — The  Packing  List  or 
Measurement  Note,  which  is  another  desirable  document,  need 
not,  however,  necessarily  go  to  bankers  (although  it  usually 
does),  since  the  information  given  in  it  is  not  of  special  interest 
to  them  as  referring  to  the  actual  value  of  the  shipment.     TJie 

1  See  Form  5. 

2  See  Form  6. 


BROWNE,  GREENE  &  WHYTE 

CINCINNATI  AND  NEW  YORK 

STATEMENT  OF  CHARGES 

statement  No.^6S24i .Applying'  to  Invoice  No...??2i 

New  York.-Au^et.3i,..191.. 


Transfer  to  Steamer  |7.40 

Recoopering  Case  #9  3.85 

Ocean  Freight  Prepaid 

£48.16.6     @  I|j4.86  -  237.29 

Marine  Insurance  on     #1835.@    H  ^9.X3 

War  Risk  Insurance  @    i%  ^  9*^3 

$265.20 

Exchange  @  $4.82     .£55.   0.6 

Invoice  #6224  341.14.7 

£396.15.1 

E.    &  O.E. 

August  31,    191 

BROWNE,  GREENE  A  WHYTE 


Form  5 — Statement  of  Charges. 

Sundry  charges  applying  to  invoice  illustrated  in  Form  4  are  here  sep- 
arately enumerated.  This  way  of  making  these  charges  is  sometimes  de- 
sirable, instead  of  writing  them  on  the  face  of  the  invoice  itself. 


Memc 
Shipped  by  Messr 

"Pcf S...S. « 

JJccount  of. 


KS  & 

BERS 


#1  Cne  li 
#3  One  l) 

-#3  One  3; 
J.  #4  One  2 

er;:o|;l    ^^  ^^^  ^^ 

#3  One 
^?  One 
#8  Cne 
7;^0  One 

#10  One  1 

#11  Rep-ai 

#12  Adver 


>8» 


SK9 
4) 


CO 


^ 
S 
^ 


MmoraitJufn  of  Weights,  Measurements  and  Rales  of  Merchandise 
Shipped  l>y  Masn.  BROWNE  .  GREENE  A  WHYTB  .    Crnci/wati  in/JVeu  York 


"ADHUIIO"  '» 

HAEMSOII,    POST,    HATKAWAY  i  CO. 


#3  One  2i  H.P.   Englre 

0  fi  One  2}  H.P.  Engine 

f5  One  24  H.P.   Enelne 

=3  One  8  H.P.  Engine 

h  One  8  H.P.  Engine 

#S  one  8  H.P.  Engine 

iO  One  8  H.P.  Engine 

#10  One  12  H.P.   Engine 

#11  Repair  Parts 

#12  Advertising  Hatter 


14000 
4700 


Form  6 — Weight,  Measurement  and  Rate  Memo. 


O 

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Od 


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09 


CO 


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6R0WNE,  GREENE  6  WHYTE.  shipping  6  financul  advice 

CINCINNATI  AND  NEW  VORIl 

Cables:  "Breene,  New  York-  b^oadwav  chambers 

Codes  Dstd:  A.  B.  C.  4th  Md  Sth  ^^^  ^^^^  _,^^^^^  3^    „ 

Liebers,  Western  OiUon. 


„Hairiaon,.Poat,-  Hathaway- 4  Co,, 

507_ Lime  Street,  .. 

- Liverpool . 


1 


Vrar  SiilB  ■  ,  ,  j  j 

We  beg  to  advise  having  drawn  on  you  for 

£       396-^-15.    1  ® Blgl't        d,t  being  Ihe  value  of  a  shifmeiil  made  by  m  per 

.jaiS-.-'ADHIATIC" -  "     -  Liieipool /«>■  «"'•"'  "/ 

yOUTBelVeS _ - We  liave  negotiated  our  Draft 

^jl/j QUI Bankers,  instructing  them  to  pass  documents  through 

.,.,        _...,...    ..--..>..^->    - with   current   Colonial  exchange 

'^" "" ~ "  ""tIu  Insurance  for  £. -41835.0.0 --^-we  have  covered  in 

The-    lOSUraaoe   Ooopftny.  .Of ...Hortlli.  AneziCA. Company  of 

Philadelphia    .„ »,//,   a«y  losses    made  payable  in LiXeipOO] 

Vessel  Sailed^     Septenber -1 

Commending  our  Draft    to  your  protection. 
We  are.  Dear  Sir. 

Yours  faithfully 

BBOWNE,    GREENE     &_JWHy2E. 

lark.^^Sj-kzs.  12 £      341.-  .14^.  ...n~ - 


Invoice  No 6224^ 


„  CMrgefl  ae  per  ...  8  tatement -5.5  .....Of,   6 ,  _ 


Form  7 — Shipping  and  Financial  Advice. 


c 


1 


1 


PREPARING  SHIPMENTS  383 

invoice  will  or  should  show  in  just  which  case  of  a  shipment  each 
particular  item  is  packed.  A  packing  list  should  also  be  supplied 
giving  the  reverse  information,  that  is,  just  what  is  contained  in 
each  case,  but  more  especially  the  net  and  gross  weights  and 
cubic  measurements  of  each  case.  Such  a  list  is  especially  useful 
to  importers  when  a  shipment  consists  of  a  large  number  of 
packages. 

Other  Papers.— Other  papers  which  may  have  to  be  prepared 
to  accompany  export  shipments  vary  with  the  circumstances  oi 
such  shipments,  but  almost  always  include  notice  of  draft  sent  by 
shippers  directly  to  customers  telling  the  latter  how  collection  is 
being  made,  amount  and  terms  of  draft,  etc.^  This  will  be  the 
better  understood  when  we  reach  the  chapter  considering  methods 
of  financing  foreign  business. 

In  some  lines  it  is  necessary  to  supply  certificates  of  inspection, 
analysis,  weight,  count,  etc.,  especially  in  connection  with  ship 
ments  of  meats,  oils,  grain,  lumber,  and  similar  commodities. 
Copies  of  these  certificates  are  also  usually  demanded  by  bankers 
who  negotiate  drafts  covering  such  shipments. 

1  See  Form  7. 


CHAPTER  XII 

MAKING  THE  SHIPMENT 

Parcel  Post  Facilities  in  Foreign  Trading — Starting  an  Export 
Shipment  by  Rail  from  an  Inland  Factory — Steamship  Serv- 
ices Available  to  All  Parts  of  the  World — Ship  Chartering — 
Ocean  Freight  Rates,  How  Governed  and  on  What  Based — 
Advantages  Offered  by  Foreign  Freight  Forwarders  and  How 
They  Operate — The  Various  Formalities  Necessary  in  Making 
an  Export  Shipment — Shipments  in  Bond — Drawback — The 
Steamship  Bill  of  Lading — Considar  Invoices,  What  They  Are 
and  When  Required. 

WHEN  goods  filling-  an  export  order  have  been  properly 
prepared  and  packed,  the  manufacturer  finds  him- 
self confronted  with  the  task  of  putting  them  into  the 
hands  of  his  foreign  customers  in  the  most  satisfactory  fashion. 
Export  shipping  practice  difiPers  from  domestic  in  some  impor- 
tant ways,  but  the  routine  motions  are  easily  and  quickly  learned. 
They  contrast  strongly  in  this  regard  with  the  necessary  formali- 
ties in  importing  goods  which,  in  this  as  in  every  country  having 
a  complicated  tariff,  is  a  strenuous  performance,  intricate  and 
complicated,  only  learned  after  years  of  apprenticeship.  Export 
procedure,  on  the  contrary,  is  simple,  only  requires  ordinary  in- 
telligence, and  most  of  the  detail  work  in  connection  with  it  can 
be  entrusted  to  minor  clerks  after  they  have  received  a  little  in- 
struction and  experience. 

POSTAL  FACILITIES 

Not  enough  attention  is  given  by  American  manufacturers  to 
facilities  offered  by  the  post  office  for  the  development  of  export 
business.  In  fact,  these  facilities  seem  not  to  be  generally  under- 
stood, for  people  in  Boston  think  it  necessary  to  ask  questions  of  a 
New  York  "export  authority"  instead  of  seeking  information  at 
their  own  post  office  or  asking  there  for  a  copy  of  the  Official 

384 


MAKING  THE  SHIPMENT  385 

Postal  Guide  and  themselves  studying  the  regulations.  The 
facilities  now  in  question  range  from  low  rates  of  postage  on 
commercial  papers  (that  is,  copies  of  invoices,  bills  of  lading 
and  other  documents)  to  sample  post  and  parcel  post. 

Foreign  Parcel  Post. — Small  orders  can  frequently  be  des- 
patched to  foreign  customers  more  cheaply  and  more  expedi- 
tiously by  Parcel  Post  than  by  any  other  means.  Even  when  a 
shipment  exceeds  the  limit  of  eleven  pounds  in  weight  for  a 
single  parcel  post  package,  it  can  often  be  divided  into  several 
parcels,  each  falling  within  that  limit.  The  parcel  post  is  some- 
times preferred  by  customers,  even  when  its  cost  is  a  little  higher 
than  some  other  means  of  forwarding,  because  custom  house  regu- 
lations applying  to  packages  thus  received  are  in  many  coun- 
tries by  no  means  so  severe  as  they  are  when  goods  are  received 
as  steamship  cargo,  in  fact,  such  packages  sometimes  pass  with 
scant  attention  to  the  levying  of  duty.  It  is  seldom  in  any  coun- 
try necessary  to  employ  a  custom  house  broker  in  order  to  get 
possession  of  goods  shipped  by  parcel  post,  whereas  the  broker 
is  unavoidable  when  cargo  has  to  be  passed  in  the  usual  way, 
no  matter  whether  there  is  a  single  paper  parcel  or  a  hundred 
big  cases  in  a  shipment. 

Not  the  same  sort  of  protection  is  required  in  making  up  pack- 
ages for  the  parcel  post,  although  strong  waterproof  wrappings 
are  advisable.  The  post  office  itself  packs  parcels  into  bags  or 
cases  for  foreign  shipment,  which  receive  the  greatest  care  in 
despatch  and  invariably  the  first  attention  of  the  steamship 
people.  Flimsy  pasteboard  boxes  are  not  accepted.  Post  office 
rules,  to  be  found  in  the  Official  Guide,  give  advice  as  to  suitable 
packing  for  the  foreign  mails. ^ 

Willie  the  L'nlted  States  has  not  yet  concluded  parcel  post 
conventions  with  all  eountries,  still  most  of  the  principal  markets 
of  the  world  can  now  be  thus  reached  from  this  country  and  this 
postal  faeility  is  being  rapidly  extended.  Yet  it  still  seems  to  be 
a  surprise  to  some  shippers  to  discover  that  it  costs  less  to  send 
a  parcel  by  post  from  New  York  to  Australia  than  it  costs  to 
send  the  same  package  to  San  Francisco.  No  zone  system  ap- 
plies in  the  foreign  parcel  post. 

1  See  also  special  chapter  on  packing  for  parcel  post  shipment  in  C.  C. 
Martin's  book,  Export  Packing. 


PARCEL  POST  TO  FOREIGN  COUNTRIES 

POSTAGE,  SIZE,   WEIGHT,  AND  VALUE 

Postage    12    cents    a    pound    or    fraction    thereof 

Greatest  length    (for    exceptions    see    Postal    Guide)     3    feet    6    inches 

Greatest  length  and    girth    combined    (for    exceptions    see    Postal    Guide)... 6    feet 

Limit   of   weight   in   general,   but  see    Postal   Guide    11    pounds 

Value    Not    limited 

LIST    OF   PARCEL    POST    COUNTRIES 

Subject   to   change   and    extension.      Always   consult  local   postmasters   and   latest 

supplements    to    Postal    Guide. 


Abyssinia** 

Aden** 

Afghanistan** 

Algeria** 

Argentina 

Ascension** 

Australia 

Austria** 

Azores 

Bahamas 

Balearic     Islands** 

Barbadoes 

Bechuanaland  Prot.**  France 

Belgian    Congo** 

Belgium 

Bermuda 

Bismarck  Arch.** 

Bolivia 

Borneo** 

Brazil* 

Br.     East    Africa** 

British   Guiana 

British     Honduras 

British    India** 

Br.    New    Guinea 

Br.    Noith    Borneo** 

Br.    Somaliland** 

Brunei** 

Bulgaria 

Cameroons** 

Canary    Islands** 

Cape  Verde  Is.** 

Ceylon** 

Chile 

China* 

Colombia 

Corsica 


Costa   Rica 
Cyprus** 
Czecho-Slovakia 
Dahomey** 
Denmark 
Dominican    Rep. 
Dutch  Guiana 
Dutch    E.    Indies 
Ecuador 
Egypt** 

Falkland    Islands* 
Finland 


French    Congo*' 

French   Guiana 

French    Guinea* 

French    India** 

French    Oceania 

Fr.    Somaliland* 

Gabon** 

Gambia** 

Germany 

Gibraltar 

Gilbert  and  Ellice  Is    New     Zealand 

Gold    Coast    Col.**     Nicaragua 


Japan 

Jugo-Slavia 

Labuan** 

Latvia 

Liberia 

Lithuania 

Luxembourg 

Macao     (China)* 

Madagascar** 

Madeira** 

Malay    States** 

Malta** 

Manchuria** 

Mauritania** 

Mauritius** 

Mauru    Island** 

Mesopotamia** 

Mexico* 

Monaco** 

Netherlands 

New   Caledonia** 

Newfoundland 

New    Hebrides** 


Port.    Africa** 

Port.    India** 

Port.    Timor** 

Reunion** 

Rhodesia** 

Roumania 

St.    Helena** 

Salvador 

Samoa* 

Santa    Cruz    Is.* 

Sarawak** 

Senegal** 

Siam 

Sierra    Leone** 

Society    Islands 

Solomon    Islands* 

South    Africa 

S.W.  Africa  Prot. 

Spain 

Straits    Scttle'ts*^ 

Sudan 

Sweden 

Switzerland** 

Syria** 

Tibet* 

Togo** 

Trinidad 

Tunis** 

Turkey** 

Turks   Island 

ITganda** 

I'ruguay 

Venezuela 

West  Indies  Br., 

Du.,   Fr. 
Zanzibar** 


Great    Britain  Nigeria' 

Greece  Norway 

Guatemala  Nyasaland    Prot.^ 

Haiti  Palestine** 

Honduras  Panama 

Hong   Kong  Paraguay** 

Hungary**  Persia* 

Iceland  Persian    Gulf* 

Indo  China**  Peru 

Italy    and    Colonies   Pitcairn   Island** 
Ivory  Coast**  Poland 

Jamaica  Portugal 

*Principal    places    only. 
**Packages    for   these    countries    are    transmitted    through    the    intermediary    of 
another    country,    involving    additional    charges    for    transportation    over    its    terri- 
tory,  which  charges  as  well  as  regular  postage  must  be  prepaid. 

REGULATIONS 
In  general,  any  article  admissible  to  the  domestic  mails  of  the  LTnited  States 
may  be  sent  in  unsealed  packages  by  Parcel  Post.  A  letter  or  communication  of 
the  nature  of  personal  correspondence  must  not  be  enclosed  with  any  parcel.  No 
parcel  may  contain  packages  addressed  to  persons  other  than  the  person  named 
in    the    outside    address    of    the    parcel    itself. 

Parcels  must  not  be  posted  in  a  letter  box  or  package  box,  but  must  be  taken 
into   the   Post    Office   and   presented   to   the   ofificer   or   clerk   in   charge. 

Every  package  must  be  securely  and  substantially  wrapped  in  such  a  way  that 
its  contents  may  be  easily  examined.  Parcels  wrapped  in  thin,  flimsy  paper  or 
packed  in  thin  pasteboard  boxes  will  not  be  accepted.  Wooden  boxes  having 
lids  screwed  or  nailed  on  and  bags  closed  by  sewing  may  be  used,  provided 
they  are  presented  at  the  post  office  open  for  inspection  and  afterwards  closed 
by    the   sender. 

CUSTOMS  DECLARATIONS 
A  Customs  Declaration  obtainable  at  the  post  office  must  be  properly  and 
fully  filled  out,  stating  the  actual  contents,  value,  etc.,  of  the  parcel.  It  must 
be  firmly  attached  to  the  cover  of  the  parcel.  Special  instructions  and  the 
number  of  copies  required  by  different  countries  may  be  learned  from  the 
Postal   Guide. 

CERTIFICATES    OF    MAILING 
The   office    of   mailing   will,    if   requested,    fill    out   and   date-stamp    a    "certificate 
of   mailing"    and   hand    the    same   to   the    sender. 

REGISTRATION 
The  sender  of  a  parcel  addressed  to  any  country  except  those  specifically  ex- 
cepted (see  Postal  Guide),  may  have  the  same  registered  by  paying  a  registration 
ice  of  10  cents,  and  if  requested  will  receive  the  "Return  Receipt"  without 
3()ccial  charge  therefor;  but  the  Post  Office  Department  is  in  no  case  responsible 
lor   loss   or   damage   to  any   parcel. 

CUSTOM    DUTIES 
Customs  duties  on  parcels  for  foreign  countries  cannot  be  prepared  by    the    senders 


386 


MAKING  THE  SniPMENT  387 

An  extra,  or  transit,  charge  is  made  on  parcels  shipped  to  cer- 
tain countries  with  which  the  United  States  have  no  direct  parcel 
post  arrangements.  But  even  witli  this  surcharge  the  cost  of 
thus  forwarding  small  shipments  is  usually  much  less  than  by 
any  other  available  means  and  the  service  (juicker  and  more  satis- 
factory. ' '  Combination  parcels ' '  are  accepted  to  certain  countries. 

The  list  of  countries  to  which  parcels  may  be  sent  by  post  from 
the  United  States  together  with  all  regulations  governing  the 
despatch  of  such  parcels  can  be  learned  at  any  post  office  or, 
in  detail,  by  reference  to  the  Official  Postal  Guide.  Emphasis 
may,  however,  be  laid  on  the  possibility  of  paying  a  registration 
fee  of  lU  cents  per  package  and  receiving  through  the  post  office 
a  "return  receipt."  This  is  often  overlooked  but  affords  the 
shipper  proof  tliat  his  goods  have  actually  been  delivered  to  his 
foreign  customer.  Further,  a  "certificate  of  mailing"  may  be 
obtained  on  request  from  that  United  States  post  office  from 
which  a  foreign  parcel  is  dispatched,  and  in  duplicate  or  tripli- 
cate, if  desired.  A  "certificate  of  mailing"  dispatched  with  in- 
voice to  a  customer  is  prima  facie  evidence  both  of  actual  ship- 
ment and  date  of  shipment. 

Parcels  shipped  by  post  to  foreign  countries  are  not  insured  by 
our  Government.  But  insurance  may  be  secured  from  sundry 
companies,  some  of  which  make  a  special  feature  of  that  business. 
^lany  claims  by  foreign  customers  because  of  lost  packages  may 
be  adjusted  without  loss  if  the  simple  precaution  of  insuring 
parcels  be  not  forgotten.  As  so  often  emphasized  in  these  pages 
every  effort  must  be  made  by  shippers  to  deliver  goods  to  cus- 
tomers promptly  and  .safely. 

Sample  Post. — It  is  possible  to  send  to  all  countries  of  the 
world  embraced  in  the  International  Postal  Union  (except  in 
times  of  war)  small  packages  of  samples  weighing  not  to  exceed 
12  ounces  gross  at  the  rate  of  2  cents  for  the  first  four  ounces 
and  1  cent  for  each  additional  2  ounces  or  fraction  thereof. 
This  class  is  supposed  to  be  restricted  to  actual  samples  "of  no 
commercial  value."  Sometimes  packages  tendered  are  refused 
because  contents  are  considered  intrinsically  valuable.  United 
States  authorities  construe  the  term  "no  commercial  value" 
much  more  strictly  than  do  similar  authorities  in  many  other 
countries.     A  pair  of  gloves  might  be  regarded  in  the  United 


388  PRACTICAL  EXPORTING 

States  as  not  admissible  to  Sample  Post,  although  honestly  in- 
tended as  samples,  and  readily  accepted  as  such  in  England,  for 
example.  It  is  possible,  of  course,  to  forward  one  article  of  a 
pair  in  one  package  and  its  mate  in  a  separate  package  by  subse- 
quent mail,  but  this  may  involve  payment  of  double  duties  by  the 
addressee  because  custom  houses  everywhere  are  quite  well  ac- 
quainted with  efforts  of  this  sort  to  get  goods  through  without 
payment  of  duties  and  are  likely  to  assess  full  duty  on  each  half 
of  a  pair,  anticipating  that  mates  are  to  arrive  on  some  other 
occasion  and  might  escape  detection.  While  the  limit  of  twelve 
ounces  appl3'ing  to  sample  post  does  not  permit  despatch  of 
samples  of  a  good  many  articles,  yet  it  is  a  facility  by  no  means 
to  be  despised  and  even  affords  a  quick  way  of  putting  samples 
of  greases,  liquids,  etc.,  when  packed  in  approved  containers,  into 
the  hands  of  one's  foreign  customers  or  prospects  without  great 
expense. 

Commercial  Papers. — Some  saving  in  postage  can  often  be 
made  when  a  heavy  lot  of  documents  of  no  special  value  have  to 
be  forwarded  abroad,  by  posting  them  as  "Commercial  Papers" 
in  unsealed  packets,  but  firmly  secured  to  avoid  loss  in  the  mails. 
This  classification  is  intended  to  apply  to  documents  that  have 
not  the  character  of  an  actual  or  personal  correspondence  and 
applies  to  bills  of  lading,  invoices,  copies  generally,  andjn  sev- 
eral respects  is  much  more  liberal  as  applying  to  the  foreign  post 
than  it  is  within  our  own  borders.  Ten  ounces  may  be  sent  for 
5  cents  and  each  2  ounces  in  excess  of  10  ounces  cost  1  cent 
additional. 

STARTING  FROM  INLAND  FACTORY  BY  RAIL 

Extraordinary  as  it  may  seem,  it  is  a  fact  that  a  good  many 
manufacturers  not  located  on  the  seaboard  apparently  expect 
that  their  foreign  shipments  will  take  care  of  themselves,  once 
loaded  into  a  railway  freight  car.  "There  is  one  point  which 
causes  considerable  trouble  not  only  to  the  railroad  but  to  both 
the  shipper  and  the  consignee,  namely,  the  fact  that  some  ship- 
pers not  thoroughly  acquainted  with  the  handling  of  export 
freight  will  send  forward  a  shipment,  say  to  Glasgow,  Scotland, 
take  out  the  local  order  railroad  bill  of  lading,  send  the  goods 
forward,  put  their  bill  of  lading  through  the  home  bank  and  rest 


MAKING  THE  SHIPMENT  389 

peacefully,  presuming  the  goods  will  go  to  Glasgow,  while  as  a 
matter  of  fact  the  goods  will  stay  in  New  York  City.  They  are 
not  even  billed  iu  care  of  any  steamship  agent,  forwarder  or  for- 
eign freight  agent. 

"In  due  time  the  railroads  are  informed  that  these  goods 
are  on  one  of  their  piers,  which  necessitates  their  tracing  back  to 
the  shipping  point,  leading  to  the  discovery  that  there  are  no 
papers,  no  instructions  and  no  arrangements  made  for  forward- 
ing from  seaboard.  It  should  be  fully  understood  by  all  ship- 
pers that  a  local  railway  bill  of  lading  is  of  no  value  on  ship- 
ments beyond  the  seaboard.  Shippers  must  not  send  forward  ex- 
port freight  without  first  making  arrangements  either  with  the 
railroad  company  or  a  forwarding  agent  at  the  port  of  ex- 
portation." ^ 

How  Rail  Shipments  Are  Handled. — All  of  the  great  railway 
traffic  lines  maintain  foreign  freight  offices  which  are  always 
available  for  information,  rates,  expediting  shipments,  making 
contracts,  etc.  Shipments  from  the  interior  are  handled  in  one 
of  two  ways.  Either  on  a  through  export  bill  of  lading  or  on  a 
local  railroad  bill  of  lading,  billed  to  the  manufacturer's  New 
York  agent,  in  care  of  some  forwarding  agent,  or  in  some  cases 
in  care  of  a  steamship  company. 

When  goods  are  shipped  on  through  bill  of  lading  issued  by  the 
railway,  the  local  railway  representative  advises  his  foreign 
freight  agent  at  New  York  to  engage  space  for  ocean  freight 
and  the  local  agent  in  due  course  hands  the  local  manufacturer 
copies  of  the  through  bills  of  lading,  the  foreign  agent  for  the 
railway  attending  to  all  details  connected  with  the  ocean  trans- 
portation. 

The  local  railroad  bill  of  lading  is  different,  in  that  some  other 
person  at  New  York  is  the  consignee  and  no  arrangements  for 
steamship  space,  etc.,  are  made  by  the  railroad.  When  the  goods 
reach  New  York  an  Arrival  Notice  is  sent  to  the  person  to  whom 
the  goods  are  consigned  and  it  is  his  duty  to  attend  to  subse- 
quent transactions  necessary  for  shipping  the  goods  abroad.  To 
practically  all  European  ports  and  to  most  other  principal  ports 
of  the  world,  with  the  exception  of  those  in  Latin  American 
countries,  through  railway  bills  of  lading  can  be  obtained.     We 

^Export  Bulletin,  Detroit  Board  of  Trade. 


390  PRACTICAL  EXPORTING 

shall  shortly  comment  on  the  advisability  of  these  bills  of  lading. 

Early  Despatch  Necessary. — Most  steamers  sail  on  routes 
which  involve  calls  at  more  than  one  foreign  port.  This  is  the 
case  with  almost  all  lines  except  those  to  Europe,  notably  with 
lines  for  Australia  and  New  Zealand,  for  the  West  Coast  of 
South  America,  for  the  Far  East  and  for  South  Africa.  In  such 
cases  goods  from  the  interior  must  be  shipped  to  arrive  at  sea- 
board in  ample  time  for  proper  stowage  in  the  ship. 

It  must  not  be  assumed  that  cargo  for  all  ports  will  be  ac- 
cepted up  to  the  scheduled  day  for  sailing.  Freight  for  the  last 
port  of  call  has  to  be  loaded  into  the  ship  first.  Most  of  these 
steamship  lines  therefore  require  that  goods  for  which  space  has 
been  engaged  shall  be  delivered  on  certain  days  ranging  over  a 
week  or  ten  days  prior  to  the  date  of  sailing.  Delivery  dates  are 
arranged  according  to  ports  of  destination,  as  per  the  steamer's 
schedule.  Freight  for  the  first  port  of  call  may  be  accepted 
sometimes  up  to  the  very  day  of  sailing.  If  other  goods  arrive, 
say,  only  three  days  ahead  of  scheduled  sailing  the  vessel  may 
refuse  further  freight  for  the  special  port  of  destination,  because 
then  loading  for  earlier  ports  of  call. 

The  Railway  Bill  of  Lading. — Railway  bills  of  lading  cover- 
ing goods  for  foreign  shipment  should  always  be  marked  "for 
export,"  or  in  the  case  of  carload  shipments  "for  export,  light- 
erage free."  When  names  and  address  of  ultimate  consignee 
are  shown  with  measurements  and  weights,  goods  arriving  at 
New  York  are  granted  free  storage  for  five  days  instead  of  for 
forty-eight  hours  only.  This  is  intended  to  provide  for  delays  in 
making  connections  with  outgoing  ocean  steamers.  It  does  not 
apply  to  goods  arriving  in  New  York  from  New  England  points 
and  active  efforts  have  been  made  by  the  railways  to  be  permitted 
to  abolish  all  free  storage.  Full  details  can  always  be  obtained 
from  the  shipping  instructions,  eastbound  guide  books  and  other 
publications  of  the  trunk  lines.  Contents  of  a  carload  need  not  be 
all  for  one  consignee  or  even  for  the  same  steamer.  But  a  carload 
for  one  vessel  is  lightered  free  alongside  the  ship. 

Shippers  forwarding  their  goods  for  export  via  New  York 
should  be  reminded  that  there  is  no  direct  or  intimate  connection 
between  arriving  railway  stations  and  the  piers  of  ocean  steam- 
ers.    It  is  necessary  for  freight  to  be  carted  from  rail  terminal 


MAKING  THE  SHIPMENT  391 

to  ship's  pier,  unless  goods  are  shipped  in  carload  lots;  in  the 
latter  case  the  cars  are  lightered  by  the  railways  alongside  the 
vessel  free  of  charge,  within  reasonable  limits  in  New  York 
Harbor. 

The  railway  companies  themselves  will  agree  to  undertake  the 
cartage  of  export  goods  for  certain  specified  rates  and  in  the 
absence  of  any  other  facilities  in  New  York  such  arrangements 
may  be  utilized,  although  usually  money  can  be  saved  by  em- 
ploying foreign  freight  forwarders  or  some  of  the  established 
carting  companies  for  special  jobs.  The  rates  for  cartage  quoted 
by  some  of  the  leading  rail  lines  range  from  50  cents  for  ship- 
ments of  less  than  200  pounds  up  to  75  cents  or  more  for  the 
same  weights,  according  to  location  of  the  steamship  pier  to 
which  delivery  must  be  made,  with  ferry  charges  added  when 
steamers  are  berthed  at  Brooklyn,  Iloboken  or  Jersey  City  piers. 
Rates  are  proportionately  less,  of  course,  for  larger  quantities 
of  freight. 

An  important  matter  quite  often  overlooked  by  inland  manu- 
facturers is  the  necessity  of  supplying  agents  of  any  description 
in  New  York  with  an  officially  signed  copy  of  the  railway  bill 
of  lading.  At  many  small  railway  stations  arriving  freight  is 
given  up  by  station  agents  without  requiring  the  production  of  a 
bill  of  lading.  This  practice,  however,  does  not  prevail  in  New 
York  or  other  big  cities  where  consignees  are  not  personally 
known.  It  is  necessary  to  produce  the  railway  bill  of  lading  in 
order  to  get  possession  of  the  freight.  If  the  manufacturer  has 
not  forwarded  such  document  to  his  New  York  shipping  people 
it  becomes  necessary  for  the  latter  to  write  or  telegraph  for  it, 
delay  ensues  and  a  steamer  may  be  lost. 

All  rail  shipments  to  seaboard  ought  to  be  prepaid  even  when 
prices  do  not  cover  such  delivery  and  the  freight  has  to  be  in- 
voiced. Prepayment  of  inland  freight  saves  a  great  deal  of  red 
tape  and  annoyance,  possibly  delay,  after  arrival  at  port. 

STEAMSHIP  SERVICES 

In  determining  routes  by  which  an  export  order  should  be 
shipped  a  manufacturer  has  to  consider  both  the  fastest  and  the 
cheapest  routes  available  and  must  exercise  due  diligence  to 
despatch  his  goods  in  ample  time  to  catch  a  desired  steamer. 


392  PRACTICAL  EXPORTING 

No  great  advantages  in  ocean  freight  rates  are  often  obtainable 
in  days  of  steamship  conferences  and  Shipping  Boards,  although 
independent  lines  do  exist.  There  is,  however,  no  excuse  at 
all  for  the  popular  cry  of  lack  of  opportunities  for  shipping 
American  goods  to  any  part  of  the  world,  in  normal  times. 

It  has  not  for  many  years  been  necessary  to  ship  goods  first  to 
Europe  in  order  to  deliver  them  to  customers  in  South  America, 
as  politicians  in  and  out  of  Congress  have  charged.  We  have 
regular  direct  sailings  from  New  York  to  Java  and  Sumatra 
and  to  the  west  coast  of  Africa,  to  points  which  it  is  doubtful  if 
the  average  Congressman  ha.s  ever  heard  of  since  he  discarded 
his  elementarv'  school  geography.  It  is  true  that  sometimes  the 
post  office  has  despatched  mails  for  South  America  via  Europe, 
because  it  is  American  practice  to  seize  the  first  opportunity  of 
getting  letters  through  to  destination  in  the  shortest  possible 
time.  But  it  is  also  to  be  remarked  that  letters  for  Germany 
used  often  to  be  despatched  by  fast  Cunarders  via  England  in- 
stead of  by  slower  direct  German  boats. 

Services  from  New  York. — It  is  impossible,  as  it  would  be  in- 
advisable, to  attempt  to  give  schedules  or  even  an  outline  of 
steamship  services  in  these  pages.  General  services  can  be 
learned  at  any  time  by  specific  inquiry  of  authorities  in  New 
York  or  by  consulting  files  of  the  New  York  Journal  of  Com 
merce,  which  will  probably  be  found  in  most  public  libraries  or 
cliambers  of  commerce.  Names  and  addresses  of  steamship  com- 
panies maintaining  services  to  all  parts  of  the  world  are  given  in 
the  Export  Trade  Directory. 

Several  New  York  forwarding  agents  publish  monthly  sailing 
lists  which  are  fairly  complete  and  are  distributed  free  of  charge 
as  advertisements. 

Services  from  Other  American  Ports. — Although  only  about 
37  per  cent,  of  the  total  exports  of  the  country  in  normal  times 
pass  through  the  port  of  New  York,  yet  it  remains  and  must  al- 
ways remain  as  the  greatest  shipping  port  for  the  greatest  num- 
ber of  commodities  and  to  the  greater  number  of  the  world's 
markets.  If  63  per  cent,  of  our  total  exports  are  cleared  through 
other  American  ports  they  are  chiefly  of  special  character  or 
destined  for  certain  special  markets  for  which  such  ports  afford 
peculiar   facilities.     Comparatively   little  grain   or   cotton,   for 


393 

niilar  de- 
ports, 
he  world 
)rt  News, 
ite  ports, 
lines  of 
e  Orient, 
America 


othing  of 
feles,  and 
ig  to  the 
!xico  and 
ices  from 
ed. 

h  Mexico 
ihipments 
btainable 
led  to  by 
r. 

snts  from 
)ast  ports 
lasia  and 
*^'cialize  in 
trilnitary 
than  car- 
er thence, 
le  Middle 
,  than  via 
ter  condi- 
elays  and 
ignees  re- 
are  some- 
3Ustomers. 
1  pounds, 
icago  for- 


it  railway 


Sjcport  Bill  ofLadinl  Ai>. -46353— Cimfrarf  Xo.-234S Lot  Jfo 

Zteiedgf-BuffalO^.JL.1^ «i«..31»-t (fnyo/'..-J.Uljr. 

Oin. -;     K.T.C.    03164 


{.. 


THE  NEW  YORK  CENTRAL  RAILROAD  COMPANY. 
SHIPPED  BT    John  Smith  4  Son  from      Buffalo,   N.Y. 

Uiefollowiog  property  ia  apparent  good  order,  except  as  noted  (contents  and  condition  of  coc 
tents  of  packages  unknown)  marked,  nnmbered.  consigned  and  destined  as  indicated  below: 
CoHBioirer     )  _     .  «^  ,     ._  L 

iHD       v        Order  Edinburgh 

DoTiHATrmi  )  ° 

HoTiTT    Duncan  Soott,   Ltd. 


I 


c 


1/14 


^~\        Edinburgh! 


ARTICLES 


Fourtaen   (14)   Caees  Carriage  Goods 


Shippers'       weicit  3450  lbs.  <s.u« u urnoio.) 


poniwor      Hew  York 
u«„...^.JieJ-tii.,. 


by     Green  Funnel  Line  S.S. 


fro^  Ih^Jhi^.'  **"  "'""*  '""^  '*  '*'»'^"'l"''  '"f  frdght  ud  chttrjes.  the  proewda  fail  to  carer  uid  frdght  and  chat^ea,  the  earner  sbaU  be  etitltlcd  to  teeoiu  the  difference 

i^    J5"I  ?^  ^^'  '^  ""^^'l  *"'y  eodotaed,  he  ^.en  up  to  the  ateamer*  conaiBncv  in  ezchaaRe  (oi  dellTere  order 
It    That  freight  prepaid  wUl  not  b«  relumed. JoodalntoriiotlosL  "uiaoKe  loi  oeuTery  orner. 

la    That  Selifar  ™yableOT'iS°h  I'S'io  l>^o^*^  ormadeupinalnelepaetagea  addreaaed  to  one  conaiKnee.  pay  full  frdghtooeochpan^L 

aitlclea*aVa^JoMtth«li*^        "'"'''  ot  any  part  of  thrar^clra  specified  herein  bepr^cnted  by  any  (suae  from  Koiog  in  the  firat  ateamer  leaTlnjr  after  the  arriral    f  aueh 


il  ruiaa  and  ra^Htatiotta  at  port  s/d. 


""^■Ja  eapenae.'Sd  ull  all  libll&SFih,  .'iSSiffl  SSjfny'S™?^SSlSt^^S'd;S^t?5,"„rafnJ'c?m'er'''"  be  "  the  rtak  of  the  owner  of  the  good.,  bnt  at 

i,  ^i!^SiS£i.?^^^SiS,si'£x^L^S£t^l^^z^'^,^i'J:'^j:::^ »/ .o.-.r, jr«,.o,.„ (^je,,,.,; i„o^ /»a,^,. „ ,> o,,..juor, 

tlona.  e.,52^aIl'i:Sa7,;£^"e?i;iSS°J;p'Xtef5P'Sif"i":£e"aSSU'SS  g^ch-SiiUr'-o'iSy^'cSiiSl'eS'ol-h^.a^-^  tobe  honnd  by  all  of  Ita  atlpola. 


Form  8— Through  RaUroad  Bill  of  Lading. 


MAKING  THE  SHIPMENT  393 

example,  is  despatched  from  New  York.  Exports  of  similar  de- 
scription are  peculiarly  characteristic  of  certain  special  ports. 

There  are  many  steamship  lines  to  various  parts  of  the  world 
taking  cargo  at  Boston,  Philadelphia,  Baltimore,  Newport  News, 
Savannah,  Mobile,  Galveston  and  at  some  intermediate  ports. 
New  Orleans  boasts  a  large  shipping  business  with  lines  of 
steamers  to  Europe,  to  South  America  and  even  to  the  Orient, 
but  it  is  especially  in  facilities  for  shipping  to  Central  America 
that  this  port  is  prominent. 

San  Francisco  and  the  Puget  Sound  ports,  to  say  nothing  of 
minor  ports  on  the  Pacific  Coast — San  Diego,  Los  Angeles,  and 
Portland,  Oregon — enjoy  especial  facilities  for  shipping  to  the 
Far  East,  to  Australia  and  to  the  West  Coasts  of  IMexico  and 
Central  America.  Specific  information  regarding  services  from 
all  American  ports  is  obtainable  in  ways  just  mentioned. 

Overland  Routes. — The  major  part  of  our  trade  with  Mexico 
and  Canada  is  carried  on  by  rail  and,  although  such  shipments 
involve  certain  special  treatment,  details  are  readily  obtainable 
from  the  carrying  companies — are  in  fact  often  attended  to  by 
them,  requiring  only  incidental  attention  by  the  shipper. 

Certain  advantages  in  some  respects  attach  to  shipments  from 
the  Middle  West  by  overland  rail  routes  to  Pacific  Coast  ports 
where  transshipment  is  made  to  steamers  for  Australasia  and 
the  Far  East.  A  number  of  concerns  in  Chicago  specialize  in 
combining  carload  shipments  from  manufacturers  in  tributary 
territory  and  making  through  rates  on  carload  and  less  than  car- 
load shipments  via  rail  to  the  Pacific  Coast  and  steamer  thence. 
It  is  claimed  that  it  is  cheaper  for  manufacturers  of  the  Middle 
West  to  ship  to  such  destinations  via  the  Pacific  Coast  than  via 
New  York,  (unless  the  Panama  Canal  route  may  alter  condi- 
tions), although  complaint  is  made  of  exasperating  delays  and 
careless  treatment  of  goods  and  it  is  doubtful  if  consignees  re- 
ceive earlier  delivery  of  their  goods,  and  shipments  are  some- 
times "split" — to  the  annoyance  and  dissatisfaction  of  customers. 
Through  rates  are  named,  usually  per  one  hundred  pounds. 
Specific  quotations  can  always  be  obtained  from  Chicago  for- 
warding agents. 

Through  R.  R.  Bills  of  Lading.^ — Any  of  the  great  railway 

I  See  Form  8. 


394  PRACTICAL  EXPORTING 

companies  will  arrange  to  issue  through  bills  of  lading  from 
points  on  their  lines  to  foreign  port,  or  even  through  to  inland 
point  of  destination  in  a  foreign  country.  While  such  a  bill  of 
lading  may  sometimes  seem  desirable  to  an  inexperienced  ship- 
per, it  is  doubtful  if,  as  a  rule  it  will  prove  advantageous  to  the 
development  of  an  export  trade.  Grain  shipments  can  thus  be 
handled  because  of  the  immense  volume  of  the  business  and  much 
more  severe  competition  for  it  than  in  general  lines  or  small 
sundry  shipments.  More  economical  arrangements  are  in  most 
cases  possible  by  giving  special  attention  to  competing  rates  and 
services.  It  may  be  observed  that  some  bankers,  at  home  and 
abroad,  especially  in  Australia,  refuse  to  recognize  through  rail- 
way bills  of  lading.  No  definite  sailing  date  or  name  of  vessel 
is  stated ;  the  responsibility  of  carriers  is  with  difficulty  fixed  in 
frequent  cases  of  short  shipment. 

Bills  of  Lading-  to  Inland  Foreign  Points. — It  is  notable  that 
few  large  importers  in  foreign  countries  when  they  happen  to 
be  located  at  inland  points  some  distance  from  their  seaports 
ever  desire  that  goods  be  shipped  to  their  own  cities  on  through 
bill  of  lading.  Carrying  companies  in  the  United  States,  either 
railway  or  steamship,  are  rarely  able  to  name  as  good  rates  or 
procure  as  good  services  for  inland  transportation  abroad  as  im- 
porters are  able  to  obtain  for  themselves  through  agents  which 
all  such  importers  of  considerable  caliber  maintain  at  their  ports. 
The  custom  of  large  importers,  therefore,  is  to  have  shipments 
consigned  in  the  care  of  such  agents  at  seaports  and  all  details 
connected  with  landing  of  goods,  clearing  through  custom  houses 
and  despatch  by  rail  or  otherwise  to  interior  destination  are  at- 
tended to  by  such  agents.  It  is  the  rare  exception  and  usually 
only  in  the  case  of  small  or  occasional  importers  that  a  through 
bill  of  ladilig  to  an  interior  point  is  requested.  Except  upon 
such  specific  request  from  foreign  customers,  manufacturers  are 
not  advised  to  seek  such  bills  of  lading. 

Steamer  Transshipments. — On  the  other  hand,  transshipments 
are  often  necessary  to  land  goods  at  some  foreign  ports.  This, 
as  has  already  been  pointed  out,  is  the  case  in  shipments  from 
European  ports  to  many  of  their  foreign  markets  as  frequently, 
or  almost  as  frequently,  as  it  is  in  American  shipments. 

Let  us  take  an  example  to  illustrate  transshipping  facilities: 


MAKING  THE  SHIPMENT  »35 

Assuming  that  shipping  facilities  will  regain  after  the  war  much 
the  same  basis  as  before,  we  may  take  Constantinople  as  an  ex- 
ample of  a  port  wnich  (although  nowadays  there  are  direct 
steamers)  it  was  formerly  necessary  to  reach  by  transshipping  en 
route  from  vessel  which  takes  the  goods  from  New  York  to  some 
other  vessel  connecting  for  destination.  It  has  been  possible  to 
forward  shipments  for  Constantinople  by  lines  reaching  Naples 
or  Genoa,  Trieste,  Piraeus  or  IMarseilles ;  they  could  be  forwarded 
by  lines  reaching  Liverpool  or  Hull,  England,  or  by  German  lines 
plying  to  Hamburg  or  Bremen.  At  all  of  these  ports  transship- 
ments were  made  to  vessels  sailing  thence  to  Constantinople. 

Competing  freight  rates  were  made  by  all  these  lines.  Ship- 
ments proceeded  in  approximately  direct  line  from  New  York 
to  Naples,  transshipping  there  to  steamer  bound  direct  for  Con- 
stantinople. The  freight  rate  was  about  the  same  as  by  the 
much  longer  route  via  New  York  to  Hamburg  and  transshipment 
there  to  vessel  sailing  all  around  Europe,  past  Gibraltar  and 
through  the  IMediterranean  to  Constantinople.  In  fact,  the 
through  rate  from  New  York  in  the  latter  case  was  but  little 
higher  than  the  rate  from  New  York  to  Hamburg  only,  or  from 
Hamburg  to  Constantinople  only.  Rates  by  direct  steamer  from 
New  York  to  Sydney,  Australia,  have  usually  ruled  only  a  little 
lower  than  rates  offered  by  certain  companies  for  shipment  to 
Liverpool  and  thence  transshipment  to  Australia. 

Wherever  there  are  direct  steamers  with  satisfactory  rates  of 
freight,  transshipping  is  to  be  avoided  because  of  the  necessary 
rehandling  of  the  goods,  with  increased  risk  of  damage  and  pos- 
sible delays  in  reforwarding. 

SHIP  CHARTERING 

Ordinary  ciuantities  of  most  commodities  are  shipped  by  ves- 
sels owned  or  operated  by  so-called  "lines"  plying  to  various 
parts  of  the  world,  with  more  or  less  regularity.  However, 
when  a  shipper  has  a  very  large  quantity  of  goods  to  be  delivered 
at  one  or  at  several  foreign  ports,  he  may  hire,  that  is,  charter 
a  whole  ship  for  the  purpose.  Such  charters  are  for  the  most 
part  confined  to  commodities  shipped  in  bulk,  like  grain,  cotton, 
sugar,  coal,  ore,  lumber,  etc.  Sometimes  manufactured  goods 
may  be  required  in  sufficient  quantities  to  make  it  necessary  to 


396  PRACTICAL  EXPORTING 

engage  the  whole  carrying  capacity  of  a  ship.  This  happens, 
for  example,  quite  frequently  with  manufacturers  of  harvesting 
machinery,  steel  products,  etc. 

How  Ships  Are  Chartered. — A  ship  may  be  chartered  for  a 
given  length  of  time  (sometimes  for  several  years),  or  for  a 
stated  voyage  or  a  voyage  out  and  back.  The  charter  party  is 
the  lease  or  contract  which  the  shipper  makes  with  the  owner  of 
a  vessel.  It  may  be  in  any  one  of  a  score  of  forms  devised  for 
special  trades  or  by  steamer  owners  according  to  their  own  pref- 
erences. Charter  rates  may  be  a  certain  sum  per  month  or  an 
agreed  price  pei*  ton,  pound,  bushel,  etc.,  of  cargo  carried. 

These  contracts  usually  provide  for  the  number  of  days  that 
are  to  be  allowed  to  shippers  for  loading  and  discharging  the 
cargo,  which  are  technically  known  as  lay  days.  The  charter 
party  usually  provides  that  if  the  vessel  is  delayed  beyond  the 
agreed  upon  number  of  lay  days  then  the  charterers  shall  pay 
the  owners  a  penalty,  known  as  demurrage,  at  some  stated  rate 
per  day  of  delay.  Obviously  space  is  not  available  in  a  book  of 
this  character  for  a  detailed  or  comprehensive  review  of  the 
whole  subject  of  ship  chartering,  as  indeed  such  a  consideration 
does  not  seem  here  to  be  called  for. 

Usually  sales  by  the  ship  load  are  regarded  as  on  the  same 
basis  as  C.I.F.  sales  of  less  than  cargo  quantities. 

OCEAN  FREIGHT  RATES 

Nowadays  we  have  all  sorts  of  technical  and  highly  compli- 
cated zone,  commodity  and  other  rates  in  our  railway  regula- 
tions. There  is  nothing  comparable  to  them  in  ocean  rates.-  No 
systematic  or  scientific  classification  of  commodities  is  in  force, 
although  a  good  deal  more  is  attempted  in  this  direction  than  in 
formg'  times.  Up  to  quite  recent  years  all.  ocean  freight  rates 
were  named  on  the  basis  either  of  weight  or  measurement.  Now, 
certain  rough,  general  classes  have  been  established  but  there  is 
absolutely  no  uniformity  in  making  such  classifications  or  in  ap- 
plying them.  Rates  in  one  direction  may  be  in  one  form,  in  an- 
other direction  in  quite  a  different  form.  Rates  on  the  same 
goods  may  by  some  lines  be  quoted  by  weight,  by  other  lines  by 
measurement,  or  sometimes  per  unit  of  packing,  per  bale  or  per 
barrel.     A  steamsliip  line  will  quote  rates  on  some  goods  in  shil- 


MAKING  THE  SHIPMENT  397 

lings,  per  long  ton  or  per  ton  of  forty  cubic  feet,  and  rates  on 
otlier  goods  in  cents  per  foot  or  per  hundred  pounds. 

In  times  past  no  schedules  of  freight  rates  were  published  by 
steamship  companies,  barring  only  a  few  lines  in  special  services 
and  in  most  cases  applied  only  to  a  limited  number  of  commodi- 
ties. Freight  rates  established  by  the  United  States  Shipping 
Board  are  at  present  being  published  with  constant  changes  and 
revisions,  but  they  apply  specifically  to  a  comparatively  short  list. 

Basis  of  Ocean  Freight  Rates. — Ocean  freights  are  payable  in 
a  variety  of  ways.  For  example:  per  pound  as  in  the  case  of 
wool  from  Australasia ;  per  bushel  as  in  the  case  of  wheat  from 
the  United  States;  per  package  as  sometimes  in  the  case  of  cot- 
ton seed  oil,  cement,  etc. ;  a  lump  sum  for  a  steam  boiler,  for  in- 
stance; per  ton  weight,  usually  for  heavy  goods  such  as  steel 
rails,  iron  bars,  etc. ;  per  ton  measurement,  usually  for  light 
goods  such  as  glassware,  shoes,  furniture,  piece-goods,  hardware, 
etc. 

Beginners  are  often  puzzled  by  the  common  steamship  quota- 
tion of  rates  "per  ton,  weight  or  measurement,  ship's  option." 
This  means  that  the  rate  named  will  be  applied  either  per  ton 
of  2,240  pounds  or  per  ton  of  forty  cubic  feet,  whichever  will 
result  in  the  larger  charge  for  the  benefit  of  the  steamship  com- 
pany. In  principle,  goods  which  do  not  weigh  fifty-six  pounds 
to  the  cubic  foot  (%(>  of  2,240  pounds)  will  be  charged  freight 
on  a  measurement  basis,  that  is  per  ton  of  forty  cubic  feet,  and 
since  it  takes  a  pretty  solid  package  of  heavy  metal  to  weigh 
as  much  as  fifty-six  pounds  to  the  cubic  foot,  it  follows  that 
the  majority  of  ocean  freight  rates  are  on  a  measurement 
basis.^ 

Quotations  of  Rates. — As  a  rule  it  is  useless  asking  a  steam- 
ship company  to  quote  rates  in  any  general  way — for  example, 
"What  is  the  rate  on  hardware  to   Cape  Town?"     Such  in- 

1  By  way  of  information  it  may  be  remarked  that  the  assumption  that 
40  cubic  feet  are  equal  to  one  ton  weight  seems  to  have  originated  in  the 
■Russian  grain  trade,  when  it  was  foimd  by  experience  that  one  ton  of 
Russian  wheat  by  weight  required  40  cubic  feet  for  stowing.  Our  Ameri- 
can wheat,  however,  is  much  lighter  in  weight,  averaging  only  about  1,900 
pounds  to  40  cubic  feet.  Although  comparatively  few  shipments  are  made 
by  sailing  vessel  it  should  be  noted  that  in  such  shipments  50  cubic  feet 
instead  of  40  are  counted  as  the  measurement  ton. 


398  PRACTICAL  EXPORTING 

quiries  will  seldom  bring  a  definite  or  specific  reply.  It  is 
usually  necessary  to  state  particulars  of  a  shipment,  specifying 
the  kind  of  goods,  their  value,  the  number  of  packages,  weights, 
measurements,  date  of  shipment  desired,  all  at  least  in  an  ap- 
proximate way,  and  very  often  it  is  only  when  this  is  done  that 
a  definite  or  firm  quotation  of  rates  is  made. 

Eates  quoted  on  a  measurement  basis,  that  is,  per  ton  of  forty 
cubic  feet,  are  by  some  lines  named  in  pounds,  shillings  and 
pence.  Rates  per  ton  weight  may  either  be  in  dollars  and  cents 
or  in  foreign  currencies ;  they  may  either  be  per  the  English  or 
long  ton  of  2,240  pounds  or  according  to  our  more  common 
American  practice,  per  one  hundred  pounds  or  per  unit.  Ow- 
ing to  the  growing  practice  of  quoting  difi'erent  rates  on  differ- 
ent classes  of  commodities  it  often  happens  now  that  a  shipper 
of  several  kinds  of  goods  (freight  forwarders  and  export  com- 
mission houses)  will  find  several  classifications  and  different 
kinds  of  rates,  even  in  different  currencies,  enumerated  on  one 
and  the  same  bill  of  lading.  Practices  in  the  shipping  trade  re- 
garding rates  and  classifications  are  in  a  chaotic  condition  and 
sadly  need  standardization. 

Influences  of  Freight  Rates  on  Business. — Ocean  freight  rates 
are  usually  called  the  cheapest  known  form  of  transportation. 
An  automobile  manufacturer  in  Michigan  said  (prior  to  the 
European  War)  that  it  cost  him  $125  to  put  a  car  into  San, 
Francisco  but  only  $85  to  deliver  one  to  Buenos  Aires.  Simi- 
larly, small  variations  in  freight  rates  or  advances  in  rates  do 
not  often  affect  chances  for  export  business  in  ordinary  lines  of 
goods.  On  a  very  large  package,  like  a  threshing  machine,  which 
may  measure  about  1,000  cubic  feet,  a  variation  in  freight  rates 
of  2  shillings  6  pence  or  5  shillings  per  ton  represents  only  about 
2  per  cent,  on  the  value  of  the  goods,  and  in  such  a  case  cannot 
materially  affect  chances  of  making  a  sale.  Freight  rates,  usual 
in  normal  times,  on  most  articles  are  not  to  be  regarded  as 
often  handicapping  the  beginnings  of  business.  But  they  must 
invariably  receive  the  special  attention  of  shippers  because  of  the 
interests  of  foreign  customers  which  have  always  and  in  every 
respect  to  be  considered  when  the  full  development  of  foreign 
trade  is  sought.  The  direct  and  distinct  interest  of  customers 
in  saving  freight  charges,  not  on  a  single  shipment  only,  but  on 


MAKING  THE  SHIPMENT  399 

the  volume  of  the  year's  importations,  perhaps  from  hundreds  of 
ditt'erent  supplies  in  sundry  countries,  is  obvious. 

Primage  on  Ocean  Freight  Rates. — Some  ocean  freight  rates 
are  net,  others  are  subject  to  a  charge  of  5  per  cent,  or  10  per 
cent,  which  is  known  as  "Primage."  This  practice  seems  to 
have  originated  in  the  early  days  of  shipping  as  sort  of  a  pres- 
ent made  to  the  captain  or  crew  of  a  sailing  vessel  to  ensure 
especially  careful  loading  and  general  attention  to  a  shipper's 
goods.  Afterwards  it  came  to  be  the  remuneration  of  some 
agents  for  shipping  lines,  but  of  late  has  probably  gone  into  the 
coffers  of  the  shipping  companies  themselves.  A  quotation  of 
rate  with  "10  per  cent,  primage"  simply  means  that  the  rate 
named  will  be  increased  by  such  a  percentage.  Forty  shillings 
plus  10  per  cent,  primage  is  precisely  the  same  thing  as  a  quota- 
tion of  44  shillings  net.^ 

Primage  is  gradually  being  abolished.  The  chief  reason  for 
its  retention,  apparently,  is  to  enable  shipping  companies  to 
grant  certain  rebates  to  shippers,  but  rebates  themselves  are  in 
most  countries  either  frowned  upon  or  positively  forbidden.  In 
which  connection  it  may  also  be  remarked  that  in  these  times  the 
largest  shippers  have  little  if  any  advantage  over  the  small  or 
occasional  shipper.  Shipping  companies  pretend,  and  are  prob- 
ably honest  in  claiming,  thai  rates  they  name  are  the  same  to  all 
comers,  big  or  little,  regular  or  occasional  shippers. 

Fluctuations  in  Rates. — -"Wherever  freight  offers,  there  the 
ships  may  go  and  do  go;  so  that,  although  industry  and  railway 
transportation  are  local  matters  within  a  particular  country, 
ocean  carriage  is  absolutely  international,  and  reflects  world  con- 
ditions which  are  often  directly  opposite  to  those  prevailing  in 
any  particular  country.  For  example,  during  the  bounding 
prosperity  which  prevailed  in  this  country  between  1901  and 
1905  there  was  the  worst  shipping  depression  ever  known. 

"Ocean  freights  may  go  to  great  depths;  and,  conversely, 
they  may  rise  to  great  heights,  for  when  the  freight  is  plentiful 
and  the  ships  are  scarce  the  only  limit  to  which  the  freight  may 
rise  is  set  by  the  limit  that  the  shippers  can  afford  to  pay  to  get 
a  particular  deal  consummated.  No  auction  room  or  horse  fair 
could  be  more  competitive  than  the  ship  market.     If  there  are 

lA  rate  of  150  shillings  was  not  unusual  during  the  European  war. 


400  PRACTICAL  EXPORTING 

two  bidders  the  price  rises ;  if  there  is  one,  he  has  his  own  way. 
In  response  to  these  primary  forces,  the  bargainers  representing 
the  ship  and  the  freight  take  advantage  of  every  factor  in  sight, 
and  freights  range  through  hundreds  of  per  cents. ' '  ^ 

It  has  usually  been  found,  heretofore,  that  there  was  slight  if 
any  advantage  to  be  obtained  by  seeking  competitive  rates  from 
various  shipping  companies.  Rates  were  almost  always  made  by 
agreement  between  companies,  which  in  fact  were  nearly  all 
united  in  combinations  of  some  description.  Present  Shipping 
Board  control  of  services  and  freight  rates,  in  some  respects 
nominal,  may  or  may  not  continue  for  some  time  to  come.  Even 
now  official  rates  are  sometimes  shaded  when  owners  or  operators 
are  short  of  cargo.  No  one  now  can  guess  as  to  what  future  con- 
ditions will  be.  Shippers  should  exercise  all  care  in  selecting 
either  the  fastest  or  the  cheapest  transportation  on  behalf  of 
and  as  ordered  by  their  customers.  Shipping  companies  for  their 
own  s.ikes,  almost  invariably  treat  their  clients  with  proper 
consideration.  But  this  by  no  means  implies  that  terms  of  per- 
sonal ac(|uaintance  and  friendship  between  shipping  clerk,  or 
traffic  manager,  and  steamship  agent  ma^^  not  ensure  promptest 
shipments  and  lowest  rates. 

Payment  of  Freight  Charges. — The  custom  has  becoroe  almost 
universal  on  the  part  of  shipping  lines  from  this  country  of  re- 
quiring prepayment  of  all  freight  charges.  In  only  rare  cases 
is  it  possible  to  forward  goods  by  steamer  subject  to  collection  of 
charges  at  destination.  It  is  well  to  have  it  understood  with  for- 
eign customers  that  if  freight  charges  must  be  prepaid  they  will 
be  charged  in  the  manufacturer's  invoices  or  statements  and 
drafts.  Such  an  understanding  is  desirable  because  the  prac- 
tices of  European  shipping  companies,  in  the  past,  at  least,  has 
been  somewhat  more  liberal  than  in  this  country,  that  is,  more 
freight  has  been  accepted  subject  to  charges  collect  than  has  been 
the  rule  here.  Accordingly,  some  foreign  buyers  more  familiar 
with  European  shipping  than  with  that  from  this  country  may 
not  understand  that  freights  from  the  United  States  must  be 
prepaid,  unless  a  preliminary  understanding  has  been  arrived  at. 

Minimum  Bills  of  Lading. — Steamship  companies  usually  im- 

1  J.  Russt'Il  Sniitli,  "Industrial  and  Coinmercial  Oeoorraphy."  Wo  liave 
had  the  moat  striking  of  illustrations  of  this  truth  during  the  European 
War. 


MAKING  THE  SHIPMENT  401 

pose  a  minimum  charge  for  small  shipments,  that  is,  will  not 
issue  an  ocean  bill  of  lading  for  less  than  a  certain  payment. 
This  limit  may  be  the  regular  freight  charge  for  one  ton,  one 
ton  and  a  half,  or  two  tons  (from  forty  to  eighty  cubic  feet) 
practice  varying  wuth  different  lines.  When  inferior  quantities 
are  shipped  the  pro  rata  cost  of  the  freight  is  correspondingly  in- 
creased. For  example,  two  cases  weighing  260  pounds  and 
measuring  twenty-two  cubic  feet  will  be  charged  as  much  freight 
as  would  four,  six  or  eight  similar  cases,  as  the  regulations  of 
the  shipping  company  concerned  may  require.  "i\Iinimum  Bills 
of  Lading"  are  therefore  to  be  avoided  if  possible.  This  may 
be  accomplished  through  a  combination  of  small  shipments  from 
several  sources  to  the  same  destination,  sufficient  to  aggregate  at 
least  a  total  volume  justifying  the  minimum  charge.  This  is 
usually  arranged  through  certain  concerns  who  specialize  in 
shipping  export  goods,  commonly  known  as  foreign  freight  for- 
warders. 

FOREIGN  FREIGHT  FORWARDERS 

Many  and  valuable  facilities  are  offered  by  the  large  body  of 
shipping  agents  who  for  want  of  a  better  name  we  call  Foreign 
Freight  Forwarders.  Manufacturers  at  inland  points  who  have 
no  agents  at  our  seaports  or  who  ha-ve  shipments  to  make  of  too 
small  bulk  to  warrant  minimum  bills  of  lading  which  are  yet  too 
large  for  the  parcel  post,  or  are  destined  for  countries  to  which 
the  parcel  post  does  not  reach,  will  often  find  foreign  freight  for- 
warders almost  indispensable.  It  may  seem  an  easy  way  for  a 
manufacturer  to  give  his  shipment  to  the  foreign  department  of 
a  railway  or  despatch  it  through  a  foreign  freight  forwarding 
agent,  but  if  he  is  seeking  to  develop  the  largest  possible  busi- 
ness, then  it  may  in  many  cases  be  wise  for  him  early  to  begin 
the  study  of  economies.  In  any  ease  certain  abuses  have  crept 
into  the  business  now  under  consideration,  and  it  is  extremelj" 
desirable  that  manufacturers  follow  their  shipments  through  to 
destination,  learning  from  their  foreign  customers  whether  ship- 
ping' methods  emploj'ed  have  given  them  satisfaction.  The 
manufacturer's  duty  is  not  filled  when  the  goods  have  been 
handed  over  to  somebody  to  be  forwarded. 

Foreign  freight  forwarders  exist  because  they  fill  a  distinct 


402  PRACTICAL  EXPORTING 

need.  The  Interstate  Commerce  Commission  has  held  that  such 
an  agent,  engaged  in  assembling  packages  belonging  to  others 
and  sending  same  in  bulk,  is  not  a  common  carrier.  The  ship- 
per who  has  a  single  small  package  to  forward,  or  possibly  two 
or  three  cases,  must  either  despatch  his  goods  on  a  minimum 
steamship  bill  of  lading  with  extravagant  freight  charge,  or  he 
must  find  some  one  who  will  combine  his  shipment  with  ship- 
ments from  others  and  forward  all  together  on  one  bill  of  lading 
at  reduced  pro  rata  charges. 

Foreig'n  Expresses.— There  is  no  such  thing  as  a  foreign  "ex- 
press," in  our  ordinary  acceptation  of  that  word.  Certain 
American  express  companies,  operating  services  over  our  own 
railways,  have  also  foreign  departments,  but  in  the  latter  their 
work  differs  radically  from  an  express  service  as  we  know  it  in 
this  country.  In  their  foreign  relations  they  lose  much  of  their 
character  as  "express"  companies  and  compete  directly  with 
other  foreign  freight  forwarders,  even  with  the  humblest  of 
them. 

With  the  exceptions  of  Canada,  Mexico,  Cuba  and  Porto  Rico 
(where  American  concerns  have  introduced  American  methods), 
no  express  services,  in  our  definition  of  them,  are  operated  on 
foreign  railways.  The  sole  justification  for  extending  the  word 
"express"  outside  of  our  own  country  consists  in  the  fast  pass- 
ages across  the  Atlantic  offered,  by  one  or  two  lines,  by  three  or 
four  large,  swift  steamers  which  make  a  specialty  of  carrying 
passengers,  have  very  little  room  for  and  usually  accept  only 
limited  quantities  of  freight  at  high  rates.  These  may  possibly 
be  called  express  boats,  but  express  services  of  any  firms  or  com- 
panies virtually  cease  when  ships  dock  at  foreign  port  of  des- 
tination. 

As  a  matter  of  fact  neither  express  compaiues,  nor  more 
modestly  named  foreign  freight  forwarders,  by  any  means  in- 
variably patronize  the  fastest  ships.  While  it  is  true  that  in 
England,  France  and  Germany  some  of  these  shipping  agencies 
have  established  a  house-to-house  delivery  in  the  capitals  of 
these  countries  and  in  one  or  two  other  large  cities,  yet  even  this 
service  is  strictly  limited  to  a  few  concerns  in  the  few  towns  in 
(|UostioM  and  the  same  concerns  have  no  facilities  of  the  sort  in 
immediately  neighboring  countries  in  Europe,  certainly  not  in 


MAKING  THE  SHIPMENT  403 

other  parts  of  the  world.  A  likeness  may  be  said  to  exist  be- 
tween express  companies  as  we  know  them  and  the  service  of  any 
of  these  agencies  in  foreign  lands  because  of  the  fact  that  small 
parcels  make  the  larger  share  of  the  business  handled  by  them. 
The  use  of  the  word  "express"  in  connection  with  export  ship- 
ments is,  however,  misleading  and  not  to  be  encouraged. 

Steamship  Companies  as  Forwarders. — Formerly  steamship 
companies  did  not  themselves  undertake  any  work  of  this  sort. 
In  recent  years  at  least  two-thirds  of  the  companies  plying  from 
American  ports  have  established  their  own  forwarding  depart- 
ments which  enter  into  immediate  competition  with  the  profes- 
sional foreign  freight  forwarders,  those  who  do  nothing  else.  In 
either  case  practically  the  same  facilities  are  offered. 

The  organization  of  such  departments  by  the  steamship  com- 
panies themselves  has  not  promoted  an  increase  of  atfection  be- 
tween them  and  the  forwarding  agents.  The  latter,  arguing 
for  their  own  position,  claim  that  shippers  are  bound  to  pay 
considerable  higher  rates  than  by  using  regular  forwarding 
agents  and  that  steamship  companies  are  certain  to  hold  up  con- 
signments for  later  shij)S  of  their  own  line  instead  of  turning 
them  over  to  a  competing  line  for  earlier  shipment.  It  may  be 
added  that  some  of  the  petty  charges  which  the  forwarding 
agents  are  accustomed  to  make  also  characterize  the  forward- 
ing departments  of  steamship  companies.  However,  the  faet  re- 
mains that  shippers  now  have  the  choice  between  consigning 
small  shipments  directly  to  the  forwarding  departments  of  the 
steamship  companies  which  they  wish  to  patronize,  in  case  such 
companies  maintain  forwarding  departments,  and  utilizing  inde- 
pendent freight  forwarders. 

Operations  of  Foreign  Freight  Forwarders. — The  organiza- 
tion and  operations  of  a  forwarding  agent  may  be  roughly  epito- 
mized as  follows:  An  active  campaign  is  made  for  the  patron- 
age of  manufacturers  who  have  regular  or  occasional  foreign 
shipments  to  make.  Such  clients  are  supplied  with  Advice  of 
Shipment  forms  on  which  instructions  are  given  to  the  for- 
warders and  mailed  to  them  with  the  railway  bill  of  lading. 
These  forms  instruct  the  forwarding  agents  precisely  what  to  do. 
with  the  shipments  to  which  they  refer.^ 

1  See  Form  9. 


404  PRACTICAL  EXPORTING 

Upon  arrival  of  the  goods  in  New  York  the  forwarding  agent 
follows  one  of  two  courses,  as  may  be  necessary :  He  either  takes 
the  goods  to  his  own  warehouse,  there  to  combine  them  with  other 
goods  for  the  same  foreign  destination,  or  he  treats  them  pre- 
cisely as  would  a  manufacturer,  or  any  other  shipper  located  in 
New  York,  in  delivering  direct  to  steamer  and  going  through  the 
usual  formalities  and  operations.  It  may  be  necessary  for  the 
forwarder  to  pack  together  a  number  of  small  packages,  which 
may  even  be  paper  covered  parcels,  into  one  large  shipping  ease. 
When  the  forwarder  has  not  collected  a  sufficient  quantity  for 
any  single  destination,  it  may  be  necessary  for  him  to  make  up 
one  combination  shipment  of  packages  intended  for  several  dif- 
ferent ports.  This  he  will  send  to  some  correspondent  abroad  at 
a  centrally  located  point,  by  whom  the  shipment  will  be  broken 
up  and  distributed  item  by  item  to  the  neighboring  ports.^  For- 
warding agents  exist  all  over  the  world  and  any  concern  in  this 
business  is  in  more  or  less  intimate  touch  with  correspondents 
equipped  for  the  same  sort  of  operations  in  the  principal  foreign 
markets  to  which  shipments  are  likely  to  be  made  from  the 
United  States.  The  agents  at  foreign  ports  are  continually  mak- 
ing up  their  own  combinations  just  as  do  the  Americans. 

If  a  shipment  handled  by  a  forwarding  agent  for  an  American 
manufacturer  is  sufficient  in  volume  to  warrant  an  individual 
steamship  bill  of  lading,  such  a  document  is  procured.  If,  how- 
ever, a  small  shipment  has  to  be  combined  with  several  other 
small  shipments,  then  the  forwarding  agent  takes  out  a  bill  of 
lading  in  his  own  name  covering  the  whole  and  issues  his  pri- 
vate receipts  or  bills  of  lading  to  the  individual  shippers.  The 
bills  of  lading  which  he  so  issues  show  the  name  of  the  foreign 
correspondent  to  whom  the  combined  shipment  has  been  des- 
patched and  who  will  make  the  distribution  of  the  several  items 
included  in  the  whole  shipment.^ 

Needless  to  remark,  all  these  operations  applied  in  taking  care 
and  keeping  track  of  hundreds  or  thousands  of  packages  every 
MTck,  involve  an  immense  amount  of  detail  and  clerical  work.  It 
must  be  remembered  that  all  the  formalities  necessary  in  any 
foreign  shipment  have  to  be  attended  to,  including  usually  also 

1  Sec  Form   11. 

2  See  Form  10. 


SHIPPING    INSTRUCTIONS   for 

C.   B.   RICHARD  &  CO. 

FOREIGN     FORWARDERS     and     FREIGHT     CONTRACTORS 


29  BROADWAY,    NEW   YORK 


o 


Shippers  will  please  fill  out  this  form  and  mail  to  C.  B.  RICHARD  &  CO.,  or  hand  to  truckman  with  ahipment 

DEAR  SIRS:  Dale Au£ii6t  Z4 -.-I9I.„ 

Please  note  the  following  shipping  instrucbons  for  goods  sent  to  youf  care  at  New  York  (Refer  to 

yours  of Auguat  15 or  Contract  No. -^---f 

Make  Bills  of  Lading  in  name  of ourselves  - „.,.. as  shippers 

Consign  to Frey^erc.^;  Co.-,.  Santos. _.._ — ™ 

Party  to  be  notified. Taortiino  ImSoSj - - -■ - — - - — 

_ "\if>  Lladelra.   Sao  Paulo — „ 


S-.   CO. 
Sao  Paulo 


1  crate  Velocipedee 


P 


Through  Freight  and  all  charges  to  be  charged 

Freight  to  New  York.  Boston  or  Philadelphia  to  be  charged 

to ua 

Cartage  to  Ship's  side  to  be  charged  to us..., , 

Ocean  freight  to  be  charged  to  ...  Coneigaee 

Your  services  to  be  charged  to Consignee 

Value  for  Customs  Clearance  $  91 . 

You  will  insure  against  Marine  Risk  for  $  lie.    ^ 

and  charge  cost  to. .    consignee 

VWe  affirm  that,  the  above  is  a  correct  declaration  and 

agree  to  pay  any  and  all  charges  incurred.    I/We  waive  clai 

Yours  truly 


IMPORTANT.— Shipper  should  attach  hereto  Local 
same  the  marks,  numbers  or  address  on  goods,  (b)  When  ii 
to  such  receipts  "Vq  C.  B.  RICHARD  &  CO.,  29  Bi 


Collect  for  our  account  $ ---rr.^—r. — . 

Collection  charges  payable  by  .-^■:— ,,,.*« __ 

Send 3  _Bi!ls  of  Lading  to \XB -.— 

and  .       -. Bills  of  Lading  to 

Goods  shipped  by     .H.Y.C.      R.  R.  in  Car  No.. .15 

Special  Instructions 

Charge  consular  t&est  to-  consignee 


should  the  shipment  for  any  cause  be  refused  or  returned, 
fi  for  loss  or  damage  to  packages  or  contents  unless  insured. 


^S^»- 


S^ 


Express  or  Railroad  Receipt,  (a)  Always  show  clearly  on 
1  carload  lots  add  "Lighterage  free",  (c)  and  also  add 
:oad>vay.  N.  Y.,"  "For  Export". 


Form  9— Instructions  to  Forwarding  Agents. 


# 


..-.on • 

ship  or  Vessel)  now  lying  in  the  Port  of 


qqj^  to  be  transported 


,'ke  good  order  and  well  conditioned,  at 
and  to  be  by  them  forwarded  thence  at 
ling  of  connecting  line  or  lines),  to  the 
r     " 

j'"     ►„  VnrV-Antwerp  Rules,  1890. 
'Sranlbe-Tn^he  marUs  and  nu.be.. 

rBl^??fV   Master  or  crew.  J-^^^^^^^^^^ 
fecay.  Insufficiency  of  Wrappers  a  ^1^^^  . 

tage,  SmeH  or  Evaporation  from  ^f  ^j  ^terage. 
of  any  Goods  eh'PP^<i',^!.'lh?nery  and  the 
Whatever.  Boilers,. Steam  or  Machmery  a  ^^^^^ 
randing,  Stra.mng.  JetUson  or  y^  _^^ 
,  or  things  above  mentioj^/^'  or  "  stevedores, 
tasters,  Offi«"Af??'Tarriers  would  otherwise 
'^ie°5  rrrras^-bl^e*^---  have  been  U.en  to 

xplosive  or  dangerous  go^s^  en  py  ^^^  ^^^j^ 
hersuch  Shipper  be  F^™?^'i,°ut  lompensation. 

,  of  their  contents  „-^hing  her  destination 

shall  be  prevented  f I°«  ^^^"'^'"p^ot  or  Lazaretto, 
i^TlSar^ervfrruKfs  Contract,  and  all 
h^  goods  shall  be  a  lien  thereon 

the  port  of  „,.,;„„  through  insufficiency  or 
not  in  good  condition  th^oUgS^i  owners  or  any 
y  other  cause  wha^=;"-^{,''ti^e  as  may  be  neces- 

f«r\n^d%TeCds^-y^^  <^^^--^  ""^''  ^" 

Fl  .  „„  HpHverv  to  ascertain  freight,  or 

or  measured  o°  delivery  to  ^^^  consignees. 


^ 


MTERRIITIONAL  FREIGHT  SERVICE 

TO  ALL  PARTS  ABROAD 


THROUGH  BILL-  OF  u^DiNG  VIA fifinoa ^TO ALexiiidxla , ' 

RECEIVED  in  appwnt  good  order  rod  coDdittoo  from .Tfthn    Riw^  t.h    X    Rftji to  be  tmuportcd 

by^-^^^H^lflatmlnnt.nr" . (or  otl«  SmuuUp  or  VbmD  how  lying  in  thf  Port  of 


m 


PITT  &  SCOTT,  Ltd. 

60  PEARL  ST. 

NEW  YORK 


Kotlfy 

Najlb  Saied  i  Co. 

P.O.Box  8002, 

Cairo. 


FREIGHT  PAYABLE  AT  JlSfltiHali 


-One^(l)-  Case  CarbOB-PapT-- 


bcins  marked  and  numbered  as  in  the  maifin.  and  a 
G  J        Sttamer'i  expense,  but  at  owner's  ritk  (Subject  to  all  dau.es  and  coodii 


TONS.  I  CWT. 


,     i.a<! 

2.  no 

1.00 

/        ^ 

7.90 

In  Witness  Whe&eoF,  the  Forwarding  Agent  has  afhrmed 

Dated in^Kew  Yoit,- .Eepteubej:.  1 


to     three  Bills  of  Lading.  aU  of 


.<o' 


,*J»»' 


^e,  CoDsipiN  wOl  apply  to ..    Oa    PappadopOUlOB    ?t    FrflT'^gj     AlftTATiriTiA. 


• 


Form  10— Forwarder's  Own  BUI  of  Lading. 


c 


No. 
Check 


^^p  WATER  STREET 
NEW  YORK,  N.Y.. 


INSTRUCTIONS 
S«  foot  o<  Way  BiU  for  «pUa»tioo 


7963 


A 


B  Ho.   1 


7998 


7956 


KKPLiLNA,    ^oB    in    berechnen,    und  etwalge    Anslagen    in 

i   Debit  HstlmmunggplaU  Bind  uns  m  berechnen.  nnd  alle 

;    CoDBlgn  Emofaenger  tu  koUektlren. 

[>    Deliver;  "    '^ 

Ug-  >•    Qgilt  alien  Kosten  in  belasten. 


^ee--properly  Endorsed  by  Shipper. 

^^NSIGNMENT  UNDELlVEREa 


WAYBILL^--,  f™.  D.  C.  ANDREWS  &  CO.  Inc..  ™  f™,;;^^^^'^^  awarders     27-29  WATER  STREET 

Cable  Address  "BOCKAND"  N.  T.     '^^'^^ £-t^-i^  «   ^    -«   >    CUSTOM  HOUSE  BROKERS  NEW  YORK  N.Y. 

'  — ■ — ~  '-"-M  j-p  j^f franciaco-Carvallio  &.  Ca>,-Eua_d.o-Oura-127,— LiaboiL_ , . 

5/iipp'</p<'Vs    __"Veicna" Bill  of  Ladmg  from    ,—  FatreLinfe .     Qcfgn  F'tighi      _  Prepaid^  ^_ .- 


Dos  Santoa  Gonoaivea  &  Ca. 
RXA  do  Coaeiolo     127-139 
Liebon 


bdlB. Barrel  Sti 


Uoreira^GuimaraeBjPe 


Warden  &  Co., 
Hua  da  Prata  40, 
Lisbon 


SPECIAL  NOTE. 

When  we  enclose  yon  copy  ol  onr  BUI  of  LaOni  for  any  Consignment,  Goods  are  NOT  to  be  delivered  until  ORIGINAL  Copy  is  prodnced  by  Con8ianee--properly  Endorsed  by  Shipper. 
WE  ESPECIALLY  REQUEST  AN  ACKNOWLEDGMENT  OF  THIS  WAY  BILL    ALSO  IMMEDIATE  NOTIFICATION  OF  ANY  CONSIGNMENT  UNDEUVERED.' 


Form  11— Forwarding  Agent's  Way  Bill. 


MAKING  THE  SHIPMENT  405 

the  securing  of  adequate  marine  insurance  and  possibly  the  prep- 
aration and  certiiication  of  complicated  consular  invoices.  In 
countries  where  the  latter  documents  are  necessary  the  employ- 
ment at  seaport  of  an  agency  of  some  description  is  really  un- 
avoidable by  an  inland  manufacturer. 

Forwarders'  Charges. — Charges  made  by  these  forwarders 
vary  according  to  circumstances.  Some  of  them  publish  elabo- 
rate rate  cards  which  purport  to  show  charges  for  packages  of 
various  weights  to  all  of  the  principal  ports  of  the  world,  but 
such  advertised  rates  are  to  be  regarded  as  purely  nominal  and 
are  almost  always  susceptible  of  discount  ranging  from  10  per 
cent,  to  30  per  cent.  In  fact,  a  forwarder's  charges  depend  so 
much  on  the  port  of  destination,  the  volume  of  other  shipments 
which  may  be  going  forward  to  the  same  port,  as  well  as  the 
volume  and  character  of  the  individual  shipment,  that  special 
rates  are  almost  invariably  quoted. 

The  profits  of  a  foreign  freight  forwarder  consist  chiefly  in 
the  advanced  prices  he  may  be  able  to  obtain  for  the  carriage  of 
goods  entrusted  to  him  through  combining  shipments  which  other- 
wise would  be  subject  to  steamship's  minimum  charges.  For 
example :  Suppose  that  a  forwarder  has  found  ten  different 
manufacturers  each  of  whom  has  a  small  shipment  for  the  same 
destination.  We  will  assume  that  these  ten  shipments  average 
half  a  ton  each.  The  ocean  freight  rate  to  the  point  of  destina- 
tion is  40  shillings  per  ton,  but  the  steamship  company  issues  no 
bill  of  lading  for  less  than  a  minimum  charge  of  40  shillings. 
Were  each  of  these  ten  manufacturers  to  forward  his  little  half- 
ton  shipment  by  itself,  each  would  have  to  pay  40  shillings 
freight.  But  the  forwarding  agent  has  collected  all  ten  to- 
gether, has  a  total  of  five  tons  to  ship  on  one  bill  of  lading,  and 
pays  40  shillings  per  ton,  i.e.,  pro  rata  only  20  shillings  on  each 
half-ton  lot  He  may  charge  each  manufacturer  30  shillings. 
Then  he  makes  a  profit  of  33^3  per  cent,  on  the  freight — while 
each  manufacturer  saves  10  shillings  for  the  benefit  of  his  for- 
eign customer,  the  difference  betM-een  the  forwarder's  charge  of 
30  shillings  and  the  steamship  minimum  of  40  shillings  which  he 
would  otherwise  have  had  to  pay. 

Undoubtedly  forwarding  agents  have  other  means  of  adding 
to  their  profits,  and  it  may  be  doubtful  if  tlie  charges  they  make 


406  PRACTICAL  EXPORTING 

for  cartag'e,  for  insurance,  etc.,  are  their  actual  out-of-pocket  ex- 
penses for  such  items.  The  charge  sometimes  made,  "$1  for  bill 
of  lading"  is  a  fee  pure  and  simple.  Bill  of  lading  forms  never 
cost  a  dollar.  However,  there  is  so  much  expense  and  so  much 
work  involved  in  a  forwarder's  office  that  he  may  be  thought  to 
deserve  any  reasonable  profits  that  he  can  make,  no  matter  how 
he  attempts  to  cover  them  up.  On  the  other  hand,  it  is  to  the 
shipper's  great  interest  to  keep  charges  as  low  as  possible. 

Advantages  Offered  by  Forwarders. — We  have  already  noted 
how  the  services  of  a  forwarding  agent  are  practically  indis- 
pensable to  the  inland  shipper  in  the  combination  of  small  ship- 
ments and  in  the  requisite  attention  to  consular  invoices  wher- 
ever they  are  required.  Some  of  them  sometimes  offer  other 
facilities.  For  example,  they  will  sometimes  send  goods  for- 
ward "freight  collect"  when  steamship  companies  themselves 
require  prepayment.  This  means  that  the  forwarding  agent 
himself  must  prepay  the  steamship  charges,  but  he  invoices  the 
charges  forward  to  his  correspondent  abroad  who  undertakes 
their  collection  from  consignees.  Undoubtedly  in  such  cases  re- 
muneration in  suitable  proportion  is  obtained  by  the  New  York 
forwarder  as  well  as  by  his  correspondent  abroad. 

Similarly,  forwarding  agents  will  sometimes  despatch  goods 
on  C.O.D.  terms,  sending  along  to  their  foreign  correspondents 
the  manufacturer's  invoices  to  be  collected  abroad  plus  all 
charges  that  may  have  ben  involved,  proceeds  ultimately  to  be 
returned  to  the  American  shippers.  Operations  of  this  sort  are 
not,  however,  to  be  generally  commended.  Returns  of  funds  are 
not  always  so  prompt  as  miglit  be  expected. 

Forwarders  as  Bankers. — In  much  the  same  way  forwarding 
agents  are  rather  fond  of  advertising  that  they  discount  manu- 
facturers' foreign  drafts.  What  most  of  them  really  do  is  to 
take  the  draft  bearing  the  maiuifacturer's  signature  and  discount 
it  with  some  established  foreign  exchange  banker  on  the  strength 
of  the  manufacturer's  own  rating  in  the  agency  books,  making  a 
small  charge  to  the  manufacturer,  usually  in  the  rate  of  ex- 
change, for  their  trouble.  In  principle,  forwarding  agents  are 
not  bankers  and  few  of  them  outside  of  certain  large  and  well 
known  companies  have  sufficient  capital  to  warrant  them  in  un- 
dertaking banking  relations.     Operations  of  this  sort  are,  there- 


MAKING  THE  SHIPMENT  407 

fore,  preferabh^  to  be  undertaken  directly  with  proper  banks. 

Forwarders'  Facilities  in  Certain  Countries. — Some  forward- 
ing agents  have  special  facilities  in  certain  markets  including, 
for  example,  delivery  to  domicile  in  the  principal  towns  of  Great 
Britain.  While  most  forwarding  agents  despatch  shipments  to 
all  parts  of  the  world,  some  of  them  confine  their  operations  to 
certain  limited  territories  and  almost  every  one  of  them  has  bet- 
ter facilities  in  some  countries  than  in  others.  Because  of  the 
large  volume  of  business  which  a  certain  forwarder  is  accustomed 
to  do  in  a  given  foreign  market,  or  because  of  peculiarly  close 
and  intimate  relations  with  some  local  correspondent  in  such 
market,  it  often  happens  that  more  favorable  quotations  are  to 
be  secured  from  such  a  forwarder  than  from  some  of  his  com- 
petitors for  the  same  market.  In  general,  it  will  be  found  ad- 
vantageous to  seek  competing  quotations  on  a  given  shipment 
from  sei'eral  forwarding  agents,  on  the  foregoing  account  as  well 
as  on  others. 

Abuses  in  the  Forwarding  Business. — The  desirability  of  al- 
ways following  shipments  through  to  destination  and  ascertain- 
ing customers'  satisfaction  with  means  emploj^ed  and  resulting 
expenses  has  already  been  remarked.  Forwarding  agents,  in  des- 
patching combination  shipments  to  correspondents  abroad  who 
are  themselves  forwarding  agents,  can  only  guarantee  or  pre- 
pay charges  known  at  this  end  of  the  line.  When  they  send  a 
shipment  to  a  foreign  correspondent  they  send  him  at  the  same 
time  a  "AVay  Bill"  which  instructs  him  as  to  the  various  pack- 
ages consigned  in  his  care,  from  whom  they  come,  how  they  are 
marked,  what  disposition  is  to  be  made  of  each,  and  they  give 
him  instructions  either  to  collect  his  own  charges  with  other 
expenses  from  consignees  or  to  debit  all  back  to  the  forwarder  in 
New  York.  If  expenses  are  debited  back  to  New  York  they  are 
then  usually  charged  to  the  shipper  and  he  ultimately  knows  all 
about  them.  If,  however,  they  are  collected  from  the  consignees, 
the  shipper  has  no  means  of  knowing,  unless  he  inquires  about 
it,  whether  they  are  regarded  by  the  consignees,  the  shipper's 
customers,  as  fair  and  just  or  the  contrary.  The  same  is  true 
when  goods  are  shipped  freight  collect. 

Furthermore,  the  foreign  correspondent  of  the  forwarding 
agent  often  takes  it  upon  himself  to  clear  goods  through  his  cus- 


408  PRACTICAL  EXPORTING 

torn  house  and  makes  his  own  charges  for  so  doing,  although  the 
American  manufacturer's  customer,  the  consignee  of  the  ship- 
ment, may  have  his  own  broker  or  other  arrangements  for  clear- 
ing goods  at  contract  or  more  reasonable  rates.  On  all  of  these 
accounts  every  effort  should  be  made  to  ensure  customers'  sat- 
isfaction with  the  forwarding  services  chosen.  Examples  of 
grossly  inflated  charges  are  by  no  means  uncommon.  The  author 
in  his  personal  experience  has  found  a  small  lot  of  samples  worth 
$5  unwarrantedly  loaded  with  $15  charges  by  forwarding  agents 
and  has  seen  an  effort  made  to  collect  a  freight  charge  higher 
by  70  per  cent,  than  was  indicated  by  the  original  bill  of  lading. 

Delayed  Shipments. — Another  abuse  sometimes  experienced 
in  operations  through  forwarding  agents  is  involved  in  the  prac- 
tice of  some  of  them  of  holding  back  shipments  for  some  unusual 
foreign  destination  until  other  shipments  for  the  same  point  can 
be  collected.  A  shipment  for  Bangkok,  for  example,  was  at  one 
time  held  by  a  New  York  forwarding  agent  for  two  months  be- 
fore finally  sent  forward,  because  the  agent  had  no  other  goods 
going  to  that  point  and  therefore  no  opportunity  of  forwarding 
economically'  for  the  manufacturer  or  making  profits  for  him- 
self. Usually,  however,  a  shipment  of  this  sort  would  be  com- 
bined with  other  shipments  going  forward,  let  us  say,  to  London, 
and  the  London  correspondent  of  tlie  New  York  agent  relied 
upon  to  join  it  to  some  otlier  shipments  from  England  to  point 
of  ultimate  destination.  Of  course,  the  London  agent  might  or 
might  not  be  able  to  do  so  promptl}'. 

A  good  deal  of  ingenuity  is  required  in  the  forwarding  busi- 
ness and  many  turns  and  twists  have  to  be  brought  into  play  in 
an  effort  to  satisfy  sliippers  and  at  the  same  time  turn  an  lionest 
penny.  It  is  the  part  of  the  manufacturer  himself  to  make  sure 
that  the  agency  he  employs  delivers  the  goods  to  his  customers  in 
the  promptest  and  most  economical  fashion  possible.  If  dissat- 
isfaction is  experienced  with  the  operations  of  one  agency,  then 
another  may  be  tried. 

Forwarders  as  Buyers  of  Goods, — American  forwarding 
agents  not  only  solicit  foreign  shipments  from  manufacturers  in 
this  country;  they  also  endeavor  to  persuade  foreign  importers 
of  American  goods  to  instruct  houses  in  the  United  States  from 
whom   they  buy   to   forward   purchases   through   their   agency. 


MAKING  THE  tilllPMENT  409 

Sometimes  tliey  go  farther  and  solicit  buying  agencies  in  this 
country.  In  so  doing  they  enter  into  immediate  competition 
with  export  commission  liouses.  Their  object  in  seeking  foreign 
orders  to  place  with  American  manufacturers  is  both  to  increase 
by  such  means  the  volume  of  their  own  shipments  and  to  gain  an 
introduction  to  strange  manufacturers  which  may  assist  in  se- 
curing their  general  patronage. 

Evidently  a  conflict  in  functions  is  likely  to  follow.  The  buy- 
ing agent  for  a  foreign  importer  and  the  forwarding  agent  for 
an  American  manufacturer  may  have  opposed  interests  to  serve. 
Moreover  few  forwarders  have  any  wide  acquaintance  either 
with  foreign  market  requirements  or  with  American  sources  of 
supply.  Their  operations  as  buying  agents  are  always  too  lim- 
ited to  make  worth  while  their  cultivation  by  manufacturers  as 
possible  sources  of  orders,  that  is  they  are  in  nowise  comparable 
in  this  respect  with  the  established  export  commission  houses. 

FORMALITIES  IN  EXPORT  SHIPPING 

Arrangements  for  the  actual  despatch  of  goods  by  ocean 
steamer  have  to  be  made  on  behalf  of  inland  manufacturers  by 
shipping  agents  or  others  at  port  of  shipment.  Export  man- 
agers of  such  manufacturers  must,  however,  understand  exactly 
what  routine  is  followed,  while  representatives  or  agents  of  such 
manufacturers  at  New  York  or  other  ports,  as  well  as  manufac- 
turers and  shippers  domiciled  at  ports,  must  learn  at  the  very 
outset  of  their  experience  the  steps  which  it  is  necessary  to  take. 
Tlie  lesson  is  simple  and  easily  enough  learned. 

Engaging  Freight  Room. — The  first  thing  ^  to  do  when  one 
has  a  foreign  shipment  to  make  is  to  inquire  for  rates  among 
steamship  companies  in  a  position  to  carry  the  shipment  to  des- 

1  During  the  war  the  very  first  thing  wliich  had  to  be  done  wab  in  some 
oases  to  secure  permission  from  the  War  Trade  Board  in  Washington  to 
uianufacture  and  prepare  goods  to  fill  an  export  order.  Import  permis- 
sion from  the  authorities  of  several  European  countries  had  to  be  supplied 
by  customers  in  such  European  countries  to  American  manufacturers  be- 
fore shipment  could  be  made  and  sometimes  before  permission  to  manu- 
facture could  be  obtained.  Thon  export  licenses  were  necessary.  Shipments 
were  not  received  by  steamship  companies  luiless  complete  documents  were 
filed  with  them  as  requij-ed  by  the  Washington  authorities  and  sometimes 
duplicate  licenses  had  to  accompany  the  goods  to  the  steamer's  wharf. 
Regulations    and    procedure    frequently    varied    from    month    to    month. 


410  PRACTICAL  EXPORTING 

tination.  "When  a  satisfactory  rate  has  been  obtained  it  is  nec- 
essary to  engage  the  freight  room.  In  other  words,  quotation  of 
freight  rates  will  have  been  made  in  response  to  inquiry  applying 
to  a  specific  shipment  and  the  engagement  of  the  freight  room 
is  virtually  the  acceptance  of  the  quotations  that  have  been 
made.  Unless  the  steamship  company  is  advised  of  such  ac- 
ceptance no  provision  will  be  made  for  taking  the  goods  on 
board  and  they  will  be  refused  if  tendered.  In  fact,  if  freight 
room  is  not  engaged  with  reasonable  promptness  it  may  be  found 
necessary  to  renew  negotiations.  When  engagement  has  been 
confirmed  every  effort  must  be  made  to  have  the  goods  ready  for 
shipment  at  the  stated  time,  for  otherwise  the  shipper  may  be 
billed  by  the  steamship  company  for  "dead  space,"  while  un- 
desirable delays  in  getting  goods  through  to  customers  ensue. 

Shipping  Permits. — When  the  steamship  company  makes  an 
engagement  for  freight  room  a  Shipping  Permit  is  delivered  to 
the  shipper  or  his  agent.^  This  document  is  in  the  nature  of  a 
notification  to  the  receiving  clerk  at  the  steamship's  dock  to  ac- 
cept certain  named  quantities  of  freight  when  tendered  between 
certain  stated  dates.  Usually  goods  are  not  accepted  on  steamer 
docks  without  the  production  of  such  a  shipping  permit.  De- 
liveries of  goods  must  be  made  in  exact  accordance  with  the 
terms  of  such  permits,  or,  if  found  impossible,  then  new  ar- 
rangements must  be  made  and  a  new  permit  secured.  If  the 
shipment  involves  no  more  than  a  single  case  or  a  single  truck 
load  of  goods,  the  permit  is  usually  given  to  the  driver  of  the 
dray  who  presents  it  at  the  same  time  as  he  delivers  the  goods 
themselves.  If,  however,  the  permit  covers  a  large  shipment,  one 
involving  several  deliveries,  then  it  is  customary  for  the  shipper 
to  mail  the  permit  with  an  appropriate  letter  to  the  receiving 
clerk  on  the  dock,  who  places  it  on  file  and  debits  against  it 
goods  as  the}'  are  delivered  from  time  to  time  within  its  limits. 

Dock  Receipts. — When  the  drayman  himself  presents  a  ship- 
ping permit  along  with  the  goods  to  be  shipped,  then  he  receives 
what  is  known  as  a  Dock  Receipt.^  This  is  simply  a  paper 
signed  by  the  receiving  clerk  acknowledging  receipt  of  certain 
goods  for  despatch   by   certain   steamer,   usually   enumerating 

1  See  Form   12. 
3  See  Form  13. 


MAKING  THE  SHIPMENT  4ll 

weights   and   mcasiiremotit«   -^   ^'      goods   so   received.     When 


Attention  of  shippers  Is 

_         ,    ,  m      I  Code  of  the  United  States  wi 

To    tlie    ReCeiYlDI    ClerL  or  other  dangerous  articles. 

S.S •'ADEIATXC!' WE  ITU  S 

Receive  from beowiie.,.....greene 

Tw.ely.e..  .(.12) C.aB.ea....GaB.Ql.iiie... 

To  be  delivered AuguS-t-2.7.r-.28 .' 

It  is  understood  that  this  eneagement  is  on  the  condition  that  deliver 
called  for  in  this  permit  or  space  will  not  be  reserved,  and  the  si  earner  and  its 
all  liability  arising  out  of  the  issuance  of  or  under  this  permit,  i  ncluding  any 
the  steamer's  proceeding  to  sea  without  the  goods, 

Jfew  York, AugUS  t.„25  ...^ „.19  peh 


Form  12— Steamship  Shipping  P 

Few  steamship  companies  will  receive  any  goods  for  ship 
sels  unless  a  Shipping  Permit  has  first  been  issued  by  ihi 
Invoice  Form  4. 


disposal  of  these  forms  when  fully  prepared.  It  sliould  be  noted  that  if  the 
exporter  has  any  doubt  as  to  the  correct  description  of  the  articles  to  be 
shipped,  in  order  that  suitable  classification  may  be  made  by  the  Govern- 


To  tie  Mmi  mi. 

S.S ?ADHIAIIC" 


WHITE  STAR  WHARF 

PIER  NORTH    RIV 


from BEOWHE,  -GBEEHE.  A .  BHYT.E 

Twelve  113)  CaB.ea  .Gaeoliae  Eoginea — 

To  be  delivered August. 3-7.^28- 


Vew  ror*,.-- Angus  t.^aS..., IB  «».... 


WHITE   STAR    LINE     p^* 


^^^ 


Form  12 — Steamship  Shipping  Permit. 


i 


c 


MAKING  THE  SHIPMENT  411 

weights   and   measurements   ^^   ■"'      goods   so   received.     "When 


ICATE^ 

NEWERVICE 


192 


^^T^arent  good  order 


,.  to  LIVERPOOL: 

,atl07l ___— — — "  „««»«  hereby  >» 


WON. 


Line 


Enginee 


>  ^  s  ^  <c 


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I 


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On 


disposal  of  these  forms  when  fully  prepared.  It  should  he  noted  that  if  the 
evpoiter  has  any  douht  as  to  the  correct  description  of  the  articles  to  be 
shipped,  in  order  that  suitable  classification  may  be  made  by  the  Govern- 


.  ,  ■■.TiS7t3a 

"WHI-TE  STAR -line; 

NEW  YORK-LIVERPOOL    SERVICE. 


^nation LOTEPOOL- 


}few  Yorlt.     tiigimt,  88 


_»i 


Twelve  (18)  Caeee 
Caeollce  Euglsee 


lit 

ii 


WHITE    STAR    LINE 
N£W  YORK  AND   LIVERPOOL  SERVICE 

Plan  99  kBd  60.  N.  R. 

Kew  York, — *»g>iat     aB 


nCCClVCd  the  foUowiTig  goods  in  apparent  good  ordtr 

BRQimE^    QRECTR   A   WTTTTf 


•  »  *l|t4f yt         ^'°''  *'"?">«"'  ^l^  "^  Steanur "ftTOTATTft" ^o  LIVERPOOL, 

•*    Si|8-2|3     ord««.«^kerj|rj™»nd(i«tfeiiiubwwail(«b»Unoll»|iiroT»itt«iSS^^ 

iillilli 

J     ttslttV. 

I  Si- 

S     Ulfli! 


'&  CO. 
IIVEEPOOL 


DBsaupncH. 
Twelve  (13)   Caeee  Oaeoliae  £Dglnes 


e. 

■  I iiil  oM  lua  tfaaa  aat  d«r  faEfm  ius  d  bI 


Form  13 — Steamer's  Dock  Receipt. 


• 


N 


r 


> 

IN 


I 


> 


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to 


k    1^ 


X 


410  PRACTICAL  EXPORTING 

tination      "When  a  satisfactory  rate  has  been  obtained  it  is  nec- 
essary to  engage  the  freight  ^         —'"   -.otation  of      ^ 


V 

^ 

\ 

\ 

o-^ 

^ 
^ 

I 

X 


iSee  Form   12. 
8  See  Form  13. 


MAKING  THE  SHIPMENT  4ll 

weights  and  measurements  of  the  goods  so  received.  When 
many  deliveries  are  made  against  a  single  shipping  permit  the 
shipper's  own  receipt  forms  are  usually  signed  by  the  receiving 
clerk  and  given  to  the  draymen  as  their  vouchers  while  a  dock 
receipt  covering  the  whole  shipment,  as  specified  in  the  original 
permit,  is  the  one  finally  returned»with  all  the  foregoing  details 
when  all  goods  included  under  it  have  been  delivered  to  the  pier. 
The  drayman's  or  other  carrier's  receipt,  signed  by  the  receiv- 
ing clerk  at  the  dock,  may  sometimes  be  of  a  good  deal  of  value 
as  evidence  of  the  exact  date  of  shipping,  that  is,  of  delivery  to 
shipping  agents.  This  may  happen  when  shipments  have  been 
contracted  before  a  certain  stipulated  date. 

]\Iissing  shipment  by  a  special  boat  may  be  a  ver}^  serious  mat- 
ter involving  rejection  of  the  goods  by  the  customer  on  account 
of  their  late  delivery.  This  is  especially  the  case  when  consid- 
erable time  elapses  between  sailings  of  vessels  for  a  given  port. 
If  it  happens  that  the  market  in  country  of  destination  is  a  fall- 
ing one,  the  consignees,  or  if  they  refuse  the  goods,  the  shippers, 
may  be  involved  in  considerable  financial  loss. 

The  dock  receipt,  it  should  be  noted,  is  not  a  bill  of  lading.     It 

is  only  the  acknowledgment  of  the  receiving  clerk  that  the  goods 

have  been  delivered.     The  receipt  which  he  gives,  known  as  the 

dock  receipt,  has  to  be  exchanged  for -the  formal  bill  of  lading  at 

the  steamship  company's  ofifiee. 

Clearing  at  Custom  House. — Export  goods  have  to  be  cleared 
through  the  custom  house  at  port  of  shipment  before  steamship 
companies  are  permitted  to  issue  bills  of  lading.  What  is 
termed  a  Manifest,  or,  as  it  is  now  called,  Shipper's  Export 
Declaration,  must  be  prepared  by  the  shipper,  enumerating  the 
ship  by  which  the  goods  are  to  be  despatched,  the  destination, 
the  marks  and  numbers  of  the  packages,  the  kind  of  goods  con- 
tained, their  values,  etc.,  all  of  which  must  be  sworn  to  by  some 
representative  of  the  shipper  before  a  notary  or  the  appropriate 
officials  in  the  custom  house.^ 

1  See  Form  14.  On  tlip  reverse  of  the  two  sheets  composing  this  form 
will  be  found  full  nnd  explicit  instructions  regardinfj  the  preparation  of 
th(>  Shippers'  Export  Declaration  and  as  to  sliipping  instructions  and  the 
disposal  of  these  forms  when  fully  prepared.  It  should  be  noted  that  if  the 
exporter  has  any  doubt  as  to  the  correct  description  of  the  articles  to  be 
sliipped,  in  order  that  suitable  classification  may  be  made  by  the  Govern- 


412  PRACTICAL  EXPORTING 

These  particulars  are  required  by  the  United  States  Govern- 
ment, as  they  are  by  all  Governments  of  the  world,  in  order  to 
keep  accurate  statistics  of  export  and  import  trade.  Manufac- 
turers and  shippers  should  cooperate  with  the  Government  in 
making  these  statistics  complete  and  exact.  The  Government 
demands  an  accurate  and  fairly  close  description  of  the  goods 
shipped  but  as  a  good  deal  of  such  shipping  is  handled  bj^  agents 
who  know  little  about  the  goods  which  are  actually  being  des- 
patched it  happens  that  there  is  not  a  little  room  for  improve- 
ment in  the  way  in  which  declarations  are  made. 

Although  it  is  provided  that  manifests  must  be  attested,  yet 
it  does  not  follow  that  the  head  of  a  house  must  in  person  visit 
the  custom  house  to  swear  to  each  manifest  that  he  files  covering 
his  foreign  shipments.  It  is  customary  to  place  on  file  in  the 
custom  house  formal  authority  empowering  some  named  clerk 
of  the  exporter  to  perform  this  duty.  Foreign  freight  for- 
warders, supplied  with  invoices  by  manufacturers  in  the  interior, 
always  attend  to  these  formalities  which  then  require  no  atten- 
tion from  such  manufacturers. 

When  the  manifest  has  been  duly  certified  at  the  custom  house 
it  is  presented  to  the  steamship  company  with  the  dock  receipt, 
attested  Shippers  Declaration,  or  evidence  of  other  special  for- 
malities fulfilled,  as  they  may  be  required,  together  with  copies  of 
the  bill  of  lading  which  have  been  prepared  in  the  shipper's  office 
and  the  latter  may  then  be  signed  by  the  steamship  agents. 

SHIPMENTS  IN  BOND— DRAWBACK 

A  large  saving  is  possible  to  some  manufacturers — or  what  is 
the  same  thing,  a  largely  increased  trade — through  certain  fa- 
cilities offered  by  the  Government  of  the  United  States  to  ex- 
porters. Although  restricted  by  entirely  too  much  red  tape,  yet 
these  are  very  real  facilities,  advantage  of  which  is  not  nearly 
often  enough  taken  by  manufacturers.  Products  subject  to  our 
internal  revenue  tax,  or  goods  originally  imported  from  foreign 
countries,  may  be  shipped  "in  bond"  without  payment  of  tax 
or  duty,  while  goods  manufactured  in  the  United  States  wholly 

mont  for  its  statistical  purposes,  then  the  exporter  may  obtain  for  five 
fonts  from  tlie  Biireaii  of  Foreign  and  Domestic  Commerce  the  official 
scliediile  of  classification  of  goods. 


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9 


SHIPPER'S  EXPORT  DECLARATION 

or  SHIPKENTS  TO  FORSGN  COUNItlES  OR  NONCOKTIGUOUS  nRRITORIES  OFIHE  U. ! 


Goods  shipped  by BRngJTJF,    fTRFTrrm  A  V/HYTF _ 

Address 3575. Smith CijieJJBmti Qhls From S. 

(NomMr.)  (Stmt.]  (City.)  (Slat«.)  (Pl»c 

Vis  — Jtniia,-i.-i» For  Shipment  on  the Br.it;isb..S.,5,..;'.Ateiat ipV. 

From Ketf--Inrk To  ultimate  foreign  destination Iii-Vftniool- tMgl  anrt 


c 


I,  tbo  vmdeTeiened,  eolemnl)'  sod  tnily  declare  that  thi 


mo—FQimA~ 


implete, just, and  trueaccouotofuUii  ^.  .  .       . 

ed  above,  and  that  thodescriptioD  and  quantity  of  each  article  u  truly  slated 
les  at  the  time  and  place  of  ebipment  lor  expfrLation.       ,  ,  ,rT-  r- 

(Signature) 


(Capacity),. 
(Address).  _ 


"president 


Form  14 — Shipper's  Export  Declaration- 


r 


INSTRUCTIONS 
Bead  tarefnlly  to  aTold  delay  nt  shipping  potnt 

1.  ProrlsfOBS  of  law.— Before  a  clearance  shall  be  granted  for  any  voeel  bound  to  a  foreign  port,  the  owners,  shippers,  or  congignore 
of  the  careo  of  such  veaeel  ehall  deliver  to  the  Collector  manifeata  (or  declaratioDB)  of  the  catH?)  or  the  parta  thereof  shipped  by  tkem 
respectively,  and  shall  verify  the  eame  by  oath.  Buch  manifests  (or  declarations)  shall  specify  the  kinds,  guantitiee,  and  -valuefl  of 
the  articles  and  the  forcim  port  or  country  of  destination.  (Sec.  4200,  Rev,  Stats.,  tJ.  S.)  If  any  vessel  bound  to  a  foreim  port  departs 
op  her  voyage  without  delivenne  manifest  and  obtaining  clearance,  the  master  or  other  person  in  charge  shall  be  liable  to  a  penalty 
of  $500  for  every  such  offenae.  (Sec.  4197,  Kev.  Stats.,  V.  S.)  Similar  provisions  apply  to  eiportations  by  rail,  vehicle,  or  terry.  (Sec. 
1,  act  March  3, 1893.)  i-j- /  t-  j        ,  .  /     \ 

2,  The  shipper  must  prepare  oa  this  form  m  dupUcale  an  eicport  declaration  for  all  merchandise  Ehipped  to  for. 

OT  bom  nonconHgumis  ttrrltorUa  of  '^"•''''•■•'"■"^•-' .  t- i':_.i-j  _<.- -■ ...,.     .    ,  ..  .(rr-._,^... 

to  ancilher.    The  origina!  declara 
adminisfer  oaths,  except  in  the  c 


t  filed  with  the  Collector.    The  original  is  for  use  of  c 

3.  Shipments  originating  at  the  seaboard. — In  the  case  of  shipments  oririnating  at  the  seaboard  or  arriving  there  from  the  interior 
expert,  the  export  declaration  (original  and  dupUcate)  touflt  be  presented  to  the  Collector  of  Customs,  who  will  reuin  the  original, 

_i;„.         J  .,. —  •'•-'"••---T  the  shipper  for  presentation  to  the  steamship  or  railroad  company,  without  which  no  freight 
any  will  attach  the  duplicate  to  the  outward  manliest  filed  at  the  cuetomhouse  when  me 
\s  cleared,  noting  thereon  any  snore  shipment  or  other  duaepancy.    Clearance  will  not  be  granted  tmtil  export  declarations 
have  been  filed  with  the  Collector. 

4.  Shipments  from  the  interior. — In  the  case  of  shipments  from  the  interior  on  throu^  bills  of  lading,  the  shipper  must  prepaie 
the  export  declaration  in  duplicate  and  deliver  both  copies  to  the  carrier  to  accompany  waybills  to  the  port  o? exportation.  The  origma  1 
may  be  placed  in  a  sealed  envelope.  In  the  case  of  shipments  on  local  billaof  lading  the  declarations  may  be  banded  to  the  earner  tj 
BCC'umpany  the  goods  or  mailed  to  the  consignee  at  the  seaboard.  Upon  arrival  of  the  goods  at  the  port  of  exportation  the  carrier  muat 
deliver  the  declajration  to  the  Collector  of  Customs.  To  prevent  delay  at  the  border  an  export  declaration  should  be  prepared  for  each 
carload  aa  otherwise  cars  breaking  down  or  detached  in  transit  may  arrive  at  port  of  exit  without  declarations, 

5.  Domeatic  articles  exported. — The  value  of  all  articles  grown,  produced,  or  manufactured  in  the  United  States  must  be  stated 
in  the  column  of  "U.  S.  Prwiucts." 

6.  Foreign  articles  exported.— The  value  of  articles  of  foreign  origin  shipped  out  of  the  United  States  in  the  same  condition  as 
importedn-  -■'--— '--'  •-■'•-—' (..o— :_  t,__j..-..  ,.    ^,t ^^i„.u _j . 

tiuninthe  . 

from  imported  raw  sugar  ehould  be  reported  a 

7    The  value  of  articles  is  the  selling  price  or  the  actual  market  value  at  the  time  and  place  of  shipment  for  eicportation. 

8.  Description  of  articles  exported  must  be  accurate  and  complete.    General  terms,  such  as  dry  Roods,  grooeriea,  meats,  machinery, 
millinery,  etc.,  will  not  be  accepted.    The  total  quantity  and  \'alue  of  each  class  of  articles  should  be  stated  in  one  item,  omittine 
details  such  aa  specific  quantities  of  different  sizea  or  kinds  of  the  same  article.    In  the  c 
filled  or  unfilled,  oleomargarine  whether  colored  or  uncolored,  butter  whether  p 


10.  The  country  of  final  desdnatloa  of  goods — that  is,  the  country  to  which  goods  are  sold— muat  be  shown.  Special  cate  should 
be  exercised  to  state  the  final  destination  of  goods  ehipped  through  Canada  to  Europe,  and  of  goods  to  be  transshipped  in  the  United 
Kingdom,  the  Netherlands,  Germany,  and  France  en  route  to  other  countries. 


11,  Inspection  certificates. — Process  butter  or  butter  adulterated  or  renovated  muat  bo  accompanied  by  < 

by  the  United  States  inspector  of  dairy  products.    Ortificate  of  inspection  must  be  p '"    -'-'■-"-  — 

products  exported  when  reqiured  by  the  regulations  of  the  Department  of  Agriculture 

12.  Export  Schedule  B  may  be  obtained  for  5  cents  from  the  Superintendent  of  Documents,  Government  Printing  Office,  Washington, 


t  be  presented  to  the  Collector 

Govemmeni 
e  principal  c 
9  m  preparing  tbe  declaraQons. 
„. is  and  Drintine  of  blanks. — ShiDi>er's  export  declarations  may  be  obtained  from  Col 

per  block  o 


0  exporters  h 

.  Sale  and  printing  of  blanks. — Shipper's  export  declarations  may  be  obtained  from  Cotlcctord  of  Custom 


To  the  Collector:  I  hereby  authorize _ — - 

addrefi3 » to  act  as  my  agent  for  customs  purposes  in  the 

exportation  of  the  within-described  goods.     Please  dehver  the  certified  duplicate  accordingly. 

92—*i*i  Shipper 


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MAKING  THE  SHIPMENT  413 

or  partly  from  imported  materials  on  which  duty  has  be'eu  paid 
may  be  granted  a  "drawback"  of  99  per  cent,  of  the  duty  paid, 
thus  enablinf?  manufacturers  to  work  ^jractically  on  a  par  with 
their  foreign  competitors,  so  far  as  cost  of  materials  goes. 

Shipping  in  Bond. — American  manufacturers  of  alcohol, 
tobacco  and  other  products  subject  to  internal  revenue  tax  can 
ship  their  products  unstamped  by  bonded  carriers  to  New  York, 
delivering  aboard  steamship  in  bond,  and  thus  offer  much  lower 
prices  than  otherwise  possible  to  foreign  customers  (less  also 
than  domestic  customers  must  pay),  or  make  larger  profits  for 
themselves.  The  carrier  delivers  aboard  steamship  in  bond  and 
certain  documents  have  to  be  prepared  to  be  signed  by  the  cus- 
tom house  officials  always  in  charge  of  steamship  docks.  When 
the  shipment  has  been  delivered  at  destination  abroad,  certifi- 
cates of  such  delivery  are  returned  to  this  country  and  the  bond 
given,  covering  the  special  goods  in  question,  is  then  canceled. 

A  similar  proceeding  is  possible  in  regard  to  goods  imported 
from  foreign  countries  and  carried  in  bonded  warehouse  with- 
out payment  of  United  States  duties.  It  is  possible  to  import 
such  goods  and  so  to  store  them  as  long  as  three  years  without 
payment  of  duty.  A  fairly  good  trade  is  done  in  such  goods, 
especially  with  near-by  markets  like  the  West  Indies  and  Cen- 
tral America.  The  proceeding  in  handling  such  shipments  is 
practically  the  same  as  that  referred  to  in  the  case  of  goods  sub- 
ject to  internal  revenue  tax.  A  landing  certificate  has  to  be 
made  out  which  goes  forward  in  the  ship  which  carries  the  goods 
and  which  is  returned  to  the  United  States  after  certification  as 
to  the  delivery  of  the  goods  abroad  by  oath  of  the  foreign  con- 
signee before  an  American  consul.^ 

With  Benefit  of  Drawback. — During  the  fiscal  year  1914  the 
United  States  Government  refunded  nearly  $5,000,000  as  "draw- 
back" to  manufacturers  of  articles  exported  who  had  used  in 
the  manufacture  of  such  articles  imported  goods  on  which  duties 

1  A  "Free  Port"  is  an  extension  of  the  idea  embodied  in  the  bonded  ware- 
house. Tt  usually  covers  a  large  area  and  provides  space  for  docks  and  for 
manufacturing  as  well  as  storage  facilities  so  that  goods  may  be  made 
within  its  limits,  solely  for  export,  w'ithout  requiring  the  entry  of  im- 
ported materials,  the  payment  of  duties  on  them  and  the  subsequent  se- 
curing of  "drawback"  on  such  duties.  Free  Ports,  successful  in  Europe,  are 
pronounced  "unconstitutional"  in  the  United  States. 


414  PRACTICAL  EXPORTING 

had  been  paid.  This  seems  like  a  very  large  amount  of  money, 
is  indeed  considerably  more  than  had  ever  before  been  refunded 
by  our  Government.  Yet,  it  is  certainly  true  that  only  limited 
advantage  is  take  of  the  provision  under  our  tariff  laws  which 
permits  a  refund  of  99  per  cent,  of  the  duties  paid  on  foreign 
materials  entering  into  the  manufacture  of  goods  afterwards  ex- 
ported. The  articles  on  which  this  drawback  may  be  obtained 
are  numbered  by  the  thousand. 

The  process  to  be  followed  in  seeking  to  obtain  a  drawback  in- 
volves an  examination  of  the  manufacturer's  claims  by  the 
United  States  Treasury  Department  agents.  On  application  to 
the  Department  an  agent  is  sent  to  investigate  the  manufac- 
turer's business.  In  due  course  he  reports  his  findings  to  the 
Department.  If  he  approves  of  the  claim  of  the  manufacturer 
to  be  using  certain  quantities  or  proportions  of  imported  goods 
in  the  manufacture  of  his  own  articles,  then  permission  will  be 
given  to  claim  drawback.  Whenever  export  shipments  of  the 
finished  articles  are  made  certain  documents  have  to  be  filled  out, 
filed  with  the  Department,  and  in  due  course  of  time  refund  of 
99  per  cent,  of  the  duty  paid  on  the  imported  materials  will  fol- 
low from  the  Treasury  Department.  It  is  customary  to  entrust 
the  necessary  formalities  to  brokers  who  make  a  specialty  of 
drawback  claims.  True  and  accurate  records  of  the  imported 
materials  which  enter  into  the  completed  articles  must  be  kept 
and  are  subject  to  inspection  and  verification  by  the  Treasury 
Department  at  any  time,  although  no  supervision  is  exercised 
over  the  manufacturer's  business.  It  is  not  necessary  that  the 
manufacturer  should  himself  be  the  importer  of  the  materials 
which  he  uses  in  his  processes  of  manufacture.  Those  materials 
may  be  imported  by  others ;  but  the  manufacturer  must  know 
when  the  goods  were  imported  and  the  rate  of  duty  that  was 
paid. 

The  process  of  securing  drawback  is  not  necessarily  a  formid- 
able one  and,  of  course,  the  99  per  cent,  duty  refunded  is  sub- 
ject to  deductions  for  broker's  fees,  etc.  The  whole  process 
might  be  much  simplified,  but  advantages  offered,  even  as  the 
provisions  of  the  law  stand,  deserve  much  greater  appreciation 
and  consideration  than  at  present  they  receive.  It  is  hoped  that 
the  Congress  will  soon  authorize  simpler  procedure. 


MAKL\a  THE  Sllll'MENT  415 


THE  STEAMSHIP  BILL  OF  LADING 

Possession  oi  a  bill  of  lading,  properly  drawn  to  a  shipper's 
own  order  or  to  a  specifically  named  consignee,  conveys  corre- 
sponding ownership  of  the  goods  represented  by  it.  Hence  it 
becomes  a  valuable  document  not  to  be  thrown  about  indiscrimi- 
nately, but  to  be  treated  with  respect  and  given  a  place  in  the 
office  safe.  Endorsements  must  not  be  made  by  an  ordinary 
clerk  but  by  some  one  with  authority  to  sign  the  name  of  the 
house  to  whose  order  the  goods  are  delivered.  Bankers  in  for- 
eign countries  have  been  known  to  refuse  acceptance  of  drafts 
drawn  against  railway  through  bills  of  lading  because  they  ob- 
ject to  bills  of  lading  signed  by  an  ordinary  railway  employee 
and  also  because  the  actual  departure  from  port  is  not  apparent 
therefrom.  In  this  place,  however,  we  shall  only  discuss  steam- 
ship bills  of  lading. 

Although  the  bill  of  lading  is  commonly  and  properly  regarded 
as  a  negotiable  instrument,  yet  the  following  extract  from  the 
British  Bill  of  Lading  Act  of  1855  (still  in  force)  should  be 
noted.  "Every  consignee  of  goods  named  in  a  bill  of  lading  and 
every  endorsee  of  a  bill  of  lading  to  whom  the  property  in  the 
goods  mentioned  therein  shall  pass  upon  or  by  reason  of  such 
consignment  or  endorsement  shall  have  transferred  to  and  vested 
in  him  all  rights  of  suit  and  be  subject  to  the  same  liability  in 
respect  to  such  goods  as  if  the  contract  contained  in  the  bill  of 
lading  had  been  made  with  himself."  It  should  also  be  borne  in 
mind  that  a  bill  of  lading  is  not  a  negotiable  instrument  in  this 
sense,  i.e.,  the  holder,  even  though  he  has  taken  it  in  good  faith 
and  for  value,  has  no  better  title  than  the  transferrer  had. 

How  Bills  of  Lading  Are  Drawn. — Bills  of  lading  must  be 
written  by  the  shippers  on  steamship  company's  forms  usually 
supplied  by  each  company  free  of  charge  upon  request.  One  or 
two  companies,  however,  make  a  nominal  charge  for  the  forms 
which  they  supply.  The  companies  will  not  prepare  bills  of 
lading  for  local  shippers;  or  for  inland  shippers  unless  they 
charge  for  so  doing. 

It  is  necessary  to  prepare  from  three  to  eight  copies  of  every 
ocean  bill  of  lading,  the  number  depending  upon  how  many 
copies  are  required  by  the  exporter  himself,  how"  many  by  the 


416  PRACTICAL  EXPORTING 

steamship  company  and  how  many  by  the  consular  authorities  of 
some  countries.  Some  of  these  copies  must  be  negotiable,  the 
balance  are  non-negotiable. 

Negotiable  and  Non-Negotiable  Bills  of  Lading.^ — Usually 
tAvo  or  three  "negotiable''  copies  are  signed,  two  if  not  three 
being  required  by  bankers  through  whose  hands  drafts  and 
documents  are  passed.  Bankers  require  what  they  call  a  "full 
set"  which  means  every  negotiable  copy  which  has  been  issued. 
The  possession  of  any  one  negotiable  copy  of  the  bill  of  lading 
is  sufficient,  when  properly  endorsed,  to  convey  ownership  of 
the  goods.  The  bank 's  security  in  the  goods  vanishes  if  a  single 
negotiable  copy  is  out  of  its  possession.  Upon  examination  of 
a  typical  ocean  bill  of  lading  it  will  be  seen  that  a  certain 
number  of  copies  is  declared  to  have  been  signed.  The  number 
of  copies  here  declared  is  the  number  of  negotiable  copies,  and 
does  not  refer  to  additional  non-negotiable  copies.  If  it  is  said 
that  "the  master  or  agent  of  said  ship  hath  affirmed  to  three 
bills  of  lading,  all  of  this  tenor  and  date,"  etc.,  there  may  none 
the  less  have  been  written  eight  copies  in  all. 

The  non-negotiable  copies  are  used  in  sundry  ways.  The 
shipper  himself  usually  requires  one  for  his  files,  one  may  be 
sent  if  so  desired  to  customer  abroad  for  his  information  and 
guidance,  although  negotiable  copies  have  been  handed  to 
bankers.  The  steamship  company  requires  one  copy  at  least, 
other  copies  may  be  required  by  foreign  consuls. 

"Order"  Bills  of  Lading. — Few  bills  of  lading  are  made  out 
directly  in  the  name  of  foreign  consignee.-  This  is  only  done 
when  the  consignee  has  actually  paid  cash  in  hand  to  the  ex- 
porter, or  has  otherwise  arranged  security  or  guaranty  before 
shipment  of  the  goods,  or  when  shipments  are  made  on  open 
account.  In  any  other  case  the  bill  of  lading  should  be  drawn 
"to  order. "^  This  means  making  the  bill  of  lading  to  read: 
"Received  in  apparent  good  order  and  condition  from  {say) 
John  Smith  &  Son"  .  .  .  "To  be  delivered  from  the  steamer's 
tackles  in  like  good  order  and  condition  .  .  .  unto  order  or  his 
or  their  assigns."     John  Smith  &  Son  are  the  shippers  and  the 

1  See  Forms   15.   16  and  17. 

2  See  Form   10. 

3  See  Form   15. 


d  on 

imshi 
inter 
othei 

ee  C 

e     I 

.« A 


if. »       1 
<e  •  s  wei 


^?e,  an 


^ 
c 


\Uiii 


!  Ms 

•  Sell 


Si 


III 


WHITE    STAR    LINE 


WHITE    STAR    LINE    OFFICES 
NEW  YORK  :  BOSTON  : 

11  Broadway 
GENOA : 

41  Via  Piazza  Nunziata 


84  State  Street 


NAPLES: 


21  Piazza  dellA  Borsa 

WHITE  STAR  LINE 
38  Leadenhall  St.,  London  and  30  James  St.,  Liverpool. 


rORWABOlM*  CLAUSE  :-Appl7inK  only  If  the  within 


0  b«  forvitrded  t- 


the  exiWDM  of  the  Steamship  CompBDj,  1>nt  stdject 

„  .„„^ , . rby  whom  the  fcoods  aro  forwftrilea,    Di>ond8UT»ry 

of  thecoodifrom  the  ship's  tackle  ftt  Liverpool  the  StPiimiihlp  C-ompnny  ceasM  toad  os  carrier, 
-       ■  -    1  forwardtoK  agent  wlthoat  responsibility.    The  ihrongh  frelfht  la  chargeJ 


lODdltlODi  of  carrlaee  of  the  Carrier  b 


owBer'n  rislc  rates  when  ssme  are  qaotod  by  carrier  by  whom  the  gooUs  a 
BTentoftbansaal  means  of  conveyancs  from  Liverpool  to  the  place  of  destlc 
Ivery  of  the  sooda  thereat  being  delayed,  Impeded,  Interniptea  or  easpende 


Steamship  Gompaay  may  la  Its  sole  deseretioo  and  option, 


I,  and  the  Rteamahlp  ( 


H  of  i>arrlft£6  and  ti 


Noe.   1-13 


&  CO. 


LIVERPOOL 


Notify 

Harrison,   Poet,   Hathaway  &  Co., 
507  Lime  Street 
Liverpool. 

f/0  Ft f. ...... ..in.  @J^y-. .....p^,  iOc.  ft.  £  /4l>JO,0 


...Bu... 

®... 


per  Barrel,  £^.. 
per  60  lbs.,  £ 
per £ 


Toat.     ewT. 


Said  to  weigh 


.i\^^^ 


sC0 


f^ 


]^1Z 


33357 


_per  2240 lbs.,  ^.. 

6  per  cent.  Primage, .. 

Charges, „ ...■ 

Total  Gold  £j/:aAVti 
lbs.  gross. 


RciwEiVEDj  in  apparent  good  order  and  condition,  from BROWHE,-..OREEKE  &..WHt.TE 

to  be  transported  by  the    Britleb    .      Steamship ."ADRIATIC" now  lying  in  the  port  of  NEW  YORK  a^^^ 

for        Liverpool         with  liberty  to  call  at  intermediate  ports  or  any  port  or  ports  in  or  out  of  the  customary  route  in  any  order,  to  receive  and 
discharge  coal,  cargo,  passengers,  and  for  any  other  purposes,  or  failing  shipment  by  said  steamship  in  and  upon  following  steamships:' 

Ten  (10)   Cases  Gasoline  Engines „ 

One   (1)     Case     Repair  Parte  - : „ 

- One... (I) Case Advextielng  Jiattcr , „ _.„ _ ...._ 1„ _ 


being  marked  and  numbered  as  above,  shipper's  weight  (quality,  quantity,  gauge,  weight,  contents  and  value  unknown),  and  to  be  delivered  in 

like  good  order  and  condition  at  the  Port  of Iiiverpool tlllto ORDER ,  or  to  his  or 

their  assigns,  he  or  they  paying  freight,  primage,  and  charges,  as  per  margin,  immediately  on  discharge  of  the  goods,  without  any  allowance  of 


credit  or  discount. 


IT  IS  MUTUALLY  AGREED  th»t  the  eteamcr  ahaJl  have  libertr  to  tul  with  or  witboat  pOoU; 

■     assist     vessels     In     distress;     to    deviate    for    the    purpose    ol   saving    life     -       • 

r  shall  hive  liberty  to  convey  goods  in  craft  and/or  lighten  to  and  from  the  i 

_iers  o(  the  goods;  and,  in  case  the  steamer  shall  put  into  a  port  of  refuge,  or 

c  from  procccfftng  in  the  ordinary  course  of  her  voyage,  to  transship  the  goods  to  their  destination  by 
the  steamer  and  carrier  shall  not  be  liable  for  loss  or  damage  occasioned  t  -  ■  ' 
,  by  fire  from  any  cause  or  wheresoever   occurring;    by   barratry   of   the 

,  ,___'e8,  or  robbers;  by  arrest  or  restraint  of  princes,  rulers,   or  people,' riots. 

labor;    by    explosion,    bursting    o(    boilers,  breakage  of  shatia,  or  any  latent  defect  i 

:  the' beginning  of  the  voyage,  provided  the  owners  have  exercised  due  diligence  to  make  the  i 
ortb>;  by  heating,  frost,  decay,   putrefaction,  rust,    sweat,    chai 
breakage,  vermin,   or  by   explosion   of  any  of   the  goods,   whether  i 


rew:  by  enemies,  pirates,  or  robbers;  by 
of    la-      .    •_  "       - 

appurtenai 

seaworthy;  6y^ heating,  frost, 

loss  or   damagi 


Sdress,  or  description;  nor  for  risk  of  craft,  bulk,  or  transshi 
tioD   of   the   voyage, 
1  of  quality,  i; '  — 

^worthy  and   properl; 

E  of   danner.   dcmai 

In  the 

I  incurred,  but,  with  the  shi 
aster  bad  not  rcsul 

easure  during  tne  voyage  by  a  vea_._  _. 
it  such   salving   vessel   or  vessels    belonged  to  slrangf 
al  Average    "         ■  -  -     ~     - 

r  conlribui: 


)  shall  be  paid  for  as  fully  a 
a  General  Average,  less  I 
■  of,   and  all  the  i 


York-Antwerp'  Rules.  "  II   the   owi 
itT.,.r  in   all    respecU   seaw 
of   danger,   dcmage, 

>p  art  en  an  CCS, 
II  the  voyage,  _  _ 
xempted  from  liability 

pecial  charges  incurrcc, .   --- 

amage,  or  disaster  bad  not  resulted  fro{ 

-tenances,  or  unseaworthiness.     I-  _  .    . 

during  the  voyage  by  a  vessel  of  the  same  Ime.  such  salvage  ser^ic 
salving   vessel   or  vessels    belonged  to  strangers.     Passengera'   effect 
General  Average,  but  claims  for  passengers'  e&ccU  Hcritaced  to  be  allowed 
proper  contribution  in  such  case.    .         .  ,  ,.     .      .  , 

t  ALSO,  that  this  shipment  is  subject  to  all  the  tema  wd  provisio 
from  liability  contained  in  the  Act  of  Congress  of  the  United  States  apprc 
Fe^Tuary.  1833,  and  entitled  "An  Act  relating  to  the  navigation  ol  vessels.  et< 

5.  ALSO,  that  the  value  of  each  package  receipted  tor  aa_  above  d 
linndred    dollars,   unless   otherwise   sUted   herein,   on  which  basis  the  rai 

4.  ALSO,  that  the  steamer,  lighter,  and  carrier  shall  not  be  liable  loi 
of  the  Revised  Statutes  ol  the  United  Slates,  unless  written  notice  ol  the 
is  Riven  st  the  time  ol  lading  and  entered  m  the  bill  of  lading. 

6.  ALSO,  that  shippers  shall  be  liable  lor  any  loSs  or  damage  to  a 
caused  by  inflammable,   explosive,  or  dangerous  goods    shipped   without 

whether  such  shipper  be   principal  or  agent;  and  such  goods  may  be  t         _„. 

any  time  without   compensation.     Extra  charges,  if  any.  lor  di^cbarguig.  lighterogc,  or  other  exp 
haxarduus  goods,  declared  or  considered  as  such  by  civil  or  military  authorities,  must  be  borne  by 

"t^ALSO.  that  the  steamer  and  carrier  shall  have  a  lien  on  the  goods^lor  all   freights, 
charges  and   also  for  all   " 
tiie  Illegal, 

Port  Cuatoms',   or   Consular  authorities.     Consular.    Board     of     Health,    or    other    certificates     requi 

__    ..    .__    J    1...    ,1.: — J  any  detention,  charges,  or  penalties  occur- 

es,  ate  to  he  borne  by  the  shippers  and/or 
rry  of  goodj  nol  plainly  marked  with  tht  port 


the   thirteenth  i 

exceed   the  i 
s  adiusti  _. 
ified  in  Section  4.2S1 


of  freight  is^  adjusted. 

earner,    cargo,   lighter,    or   wh 
full    disclosure   ol   their   natu 
iverboardor  destroyed 


incorrect,    __ 
U,  Bills  of  Ladit 

Suamrr  w 


7,    ALSO, 


liable 


r  rtipomibU  for  delay  in  I* 

'  of  the  port  oi  discharge 
lie  to  quarantine  at  any  si 
,er  from  epidemic  or  otheri 


subsequeni 


tion  therewith,  rendering  or  being 
or  in  case  o(  the  master  consider- 
■  lajunouB  to  the  further  prosecn- 


mar  be  1 
,  depot,    hulk,   lighter; 


put  Into  tauretto,  hulk,  or  Ughtei 


r  consider  sale,  at  shipper's  risk  and  expense^ 

.        ,■---- —ere    land  tbem.     Advices'rai 

shall  be  deemed,  under  this  agreemant,  •  du«  deh 
I  lor  all  quarantine 


kesVToSoi 


inees,  il  named,  or  otherwise  to' 
goods,  and  lucn  goods  shall  be 


uppers,  shall  be  deemed,  under  this  i 


oi  discharge  or  delivery,  the  same  shall  he 
"•  •-  -'— -ation,  or  retained  on  board  (oi 

[  the  owner  of  said  /[oods.     If  landed 

,  or  olb*»wise  to  shippers,  shall  be  di 

ind  such  goods  shall  be  liable  and  a  lien   held  ihei 

.-_-50,  that  Uic  steamer  may  commence  discJtargtna  immedUUtli 

\iSfnmofthaport ' "^        "    ' 

srcU  order:      " 


strikes,  lockout,  earthquake,  epidemic,  Interdict,  prohibition  ol 
beyond  the  control  of  the  said  steamer  or  steamers, 
last^,  to  unload  said  goods,  as  a  whole  or  part^ 


■Tfor  diechai'ge  imnwdtaUl] 


lor  all  extra  expenses  incurred': 

.   iqimrMdUUelu  on  arrival,  and  dtscharoe  coiiKnuoiuIu, 

vmtrcav  notiotttutandtng,  Ois  totlcctor  of  the  port  betiig  ftercAu  autftortrcri  to  nrottl 
'        '■-'  '    -■■  ofT-dfoi;  and  if  the  ooo(tg  fien-'  •"'•—  ' —  "--  -' •    ••    -  - 


until  th€  paymtiil  of  aU  &jjte  n"d 

"      '.LSO,  that  il  on  a  sale  o.  . 

aid  freight  and  charges,  the 

"10,   that   full   freigbl  is 

I  bulk  or  weight  caused 

U.    ALSO,  that  the  steamer  has  the  privilei 

doubt  exists  as  to  the  correctness  of  weights  < 

height  ^  The  expenses  of  rcwci^hing  or  remeast 

as  shall  be 'aliottell 
14.  'also,  that  for  metal  in  slabs,  bars, 
bundles 


rt&pomlhnity  em!«I.  but  tht  steamer  and  carrier  lo  have  a  Hen  on  sucJi  nooda 
"d  chfrffcs  80  incurred. 
sale  of  the  goods^  U  destioslion   (or  freight   and   charges,   the   proceeds  fall  ttt 


13.  ALSO,  if 
of  the  swe 
of  any  clai 

14.  AL5-. 

packed  property,  but  shipped 


eighing 


t  the  Toysge. 


aid  by   I 


ring  any  goods  where  rcacciubte 
Goodi   wroittly 


baled  goods  are  landed  slack 


e  shall  be  deemed  a  full  scKlFment 


ALSO. 


ithe 


Kliail  be  the  market  pritc 


.  the  prle« 


shaU 
16.    ALSO,  that  raerchai 


or  light. 


be  deemed  to  be  waived 
"     'LSO,  thai  mei 

damage  not  happeoi 
le  steamer  or  lighter,  any  loc 

17.  ALSO,   that  (his    Bill   of  Lading,   duly  codorsed.    bi 
ir  a  delivery  order. 

18.  ALSO,  that  freight  is  pa'iable  at  ciiiretU  rate  of  fxcliaiigc  for  bank  dcmni 

19.  ALSO,  that  the  freight  prepaid  will  act  be  returned,  goods  lost  or  not  loi 


liabU  for  n 

iBota,  rods,    hoops,    pistes, 

marks  and/or  weight  and/or  : 
dddvrj'  vUn  the  afeame 

I  on  Uu  day  of  the  steamer's  entii/  at  the  Custom  HoiLie,  )^  afl 
damage,  or  of  whatever  nature,  must  be  matte  in  tcrltUig  to  the 
}ods  icUhinJwe  days  after  the  steamer  or  Uahter  fliilahcd  au- 
c  taken  deUveni  of  by  the  consignee :  arid  in  care  such  claiwu 
tlaee  hereiniefore  designated,  auoh  loss  or  diimage  ahaii 

ighter  awaiting   shipment  or  delivery  be  at  shipper's  risk  of 
lit  or  negligence  of  the  owner,  master,  agent,  or  manager  of 
rilegcs  to  the  contrary  notwithstanding, 

agent  in   exchanga 
London  on  day  of 


r  reaches  her  denlii 
t  the  Gusto.. 
tt  be  matte  i. 
nerurl    " 
B  consignee ;  and  i 


2a    ALSO. 
one  consignee  pay  full  freight 

21.    ALSO,  that  packages  ex 
charges,  if  any,  for  loading,  bai 


:ei  collected  or   made 
In  weight 


liogle  packages  addressed  to 
•ball   be  liable   to  pay  extra 


In  accepting  this  Bill  of  Lading,  the  shipper,  owner,  and  consignee  of  the  goods  and  the  holder  of  the  Bill  of  Lading  agree  lo  be  bound 
by  all  of  its  stipulations,  exceptions,  and  conditions,  whether  written  or  printed,  as  fully  as  if  they  were  all  signed  by  such  shipper,  owner, 
consignee,  or  holder,  any  local  customs  or  privileges  to  the  contrary  notwithstanding. 

In  Witness  Whereof,  the  agents  of  the  said  steamer  have  affirmed  to  3  Bills  of  Lading,  all  of  this  tenor  and  date,  one  of  which 
being  accomplished,  the  others  to  stand  void, 

Dated  in  New  York,  this  thirty-first day  of August  191  For  the  WHITE  STAR  LINE.   ->l> 


Form  15 — Ocean  Bill  of  Lading. 

One  of  many  forms  iu  which  ocean  bills  of  loding  are  issued 
if  two  negotiable  copies,  has  been  drawn  "to  order"  with  11 
lanse,  and  endorsed  in  blank  by  the  shippers.     See  also  Invoice 


^f}J 


C) 


f 


4  If  ^ 

^  7  ' 

^  f  . 


3SoD 
5Soc 
JSc>d 
3 Sod 

2^0 


^7 


33 


2355y7^. 


k 


^    ^    ^    V 


«  » 


^ 


4^ 

I- 


Vv 


^  ^  cs) 


^    ^ 


I 


.....^ ^ 


MAKING  THE  SHIPMENT  417 

g-oods  are  to  be  delivered  to  them.  No  one  else  can  obtain  posses- 
sion of  those  goods,  when  bill  of  lading  is  thus  drawn, untilJohn 
Smith  &  Sou  place  their  official  signature  on  the  back  of  the 
bill  of  lading. 

The  "Notify"  Clause  in  Order  Bills  of  Lading. — However,  to 
permit  delivering  steamship  agents  to  advise  the  actual  con- 
signee of  the  goods  of  their  arrival,  it  is  permissible  to  write  in 
the  margin  of  such  a  bill  of  lading  ''Notify  Hem-y  Jones  &  Co." 
the  latter  concern  being  the  actual  consignee.  This  notifica- 
tion clause  does  not,  however,  give  Henry  Jones  &  Co.  any  rights 
over  the  goods  in  question  until  they  are  able  to  present  a  prop- 
erly endorsed  bill  of  lading.  The  delivering  steamship  agent 
will  advise  them  on  receipt  of  goods  and  the  shipment  is  not 
likely  to  lie  around  a  wharf  or  a  custom  house  for  days  or 
weeks  while  Henry  Jones  &  Co.  are  wondering  what  has  become 
of  it.    - 

Another  clause  of  similar  nature  may  sometimes  be  written  on 
bills  of  lading  in  cases  where  transshipment  has  to  be  made  in 
the  course  of  voyage  to   destination.     The  clause   in   question 

may,  for  example,  read  "Transshipping  agents  at  please 

notify  Henry  Jones  &  Co.  at  name  and  date  of  sailing 

of  transshipping  vessel."  In  cases  of  transshipment  it  is  quite 
impossible,  as  a  rule,  for  consignees  to  have  any  knowledge  of 
the  connecting  steamer  or  perhaps  even  of  its  approximate  ar- 
rival date.  The  clause  in  question  is  a  polite  request  to  the 
agents  at  the  transshipping  point  to  send  advices  to  the  con- 
signees at  port  where  they  are  established  of  the  steamer  by 
which  their  goods  will  go  forward  from  such  point.  Some- 
times such  agents  comply  with  requests  of  this  nature,  some- 
times they  do  not. 

It  should  be  noted  that  certain  countries  forbid  the  shipment 
of  goods  "to  order"  while  in  other  countries  so  doing  is  unde- 
sirable because  the  shipper  cannot  thereby  control  the  goods, 
because  of  local  conditions  or  regulations.^     This  especially  ap- 

1  For  example,  in  Venezuela  anybody  can  obtain  delivery  of  goods,  wbich 
are  turned  over  by  the  steamship  company  to  the  custom  house,  merely 
upon  presentation  of  a  copy  of  the  invoice  for  the  goods  and  sometimes 
even  by  making  suitable  representations  if  not  in  possession  of  a  copy  of  the 
invoice.  An  American  consul  in  Venezuela  advised  in  1017  that  "the  only 
way  to  give  a  bank  control  over  merchandise  shipped  here,  to  be  paid  for 


418  PRACTICAL  EXPORTING 

plies  in  normal  times  to  Venezuela,  Colombia,  Santo  Domingo 
and  Guatemala.  In  the  case  of  some  other  countries,  if  bills  of 
lading  are  drawn  to  order  the  ''notify  clause"  must  appear.^ 

Endorsements. — All  negotiable  copies  of  a  set  of  bills  of 
lading  should  be  endorsed  by  the  individual  or  firm  to  whose 
order  they  are  made  deliverable.  If  John  Smith  &  Son  are  the 
shippers  of  the  goods  and  bill  of  lading  is  drawn  to  their  order, 
then  John  Smith  &  Son  must  endorse  the  negotiable  copies  before 
passing  them  along  to  any  other  persons  whatsoever.  The 
papers  are  otherwise  useless  in  the  hands  of  anj^  one  else. 
If  Henry  Jones  &  Co.  are  the  consignees  and  the  bills  of  lading 
are  drawn  directly  to  their  order,  then  John  Smith  &  Son's  en- 
dorsement is  not  necessary,  but  the  documents  when  presented 
by  Henry  Jones  &  Co.  at  point  of  destination  will  be  endorsed  by 
them  when  taking  delivery  of  the  goods. 

It  is  not  enough  to  endorse  only  one  of  the  negotiable  copies. 
All  should  bear  the  required  endorsement,  but  in  no  event  must 
endorsement  to  the  original  be  omitted. 

Bills  of  lading,  like  bills  of  exchange,  may  be  endorsed  either 
"specially"  (that  is,  to  a  particular  person,  firm  or  bank,  etc.) 
or  "generally"  (that  is,  in  blank).  In  the  latter  case,  the 
goods  are  deliverable  to  the  person  who  presents  the  document, 
the  holder  of  a  bill  of  lading  being  deemed  to  be  the  true  owner 
of  the  goods.  Being  negotiable,  any  one  copy  of  a  bill  of  lading, 
provided  it  has  been  honestly  come  by,  is  sufficient  to  give  title 
to  the  goods. 

The  only  way  that  any  one  can  get  possession  of  goods  for 
which  he  is  not  able  to  present  title  in  the  form  of  a  properly 
drawn  and  endorsed  bill  of  lading,  is  to  furnish  a  bond  to  de- 
livering steamship  agents  in  sufficient  amount  to  indemnify 
those  agents  against  all  possible  claims  on  the  part  of  others. 

upon  arrival,  is  to  consign  the  same  to  a  bank,  giving  the  bank  instructions 
to  turn  the  merchandise  over  to  the  purchaser  upon  payment  of  the  draft 
covering  cost  of  tlie  goods."  Even  tliis  is  not  always  entirely  safe  if  the 
customers  are  not  known  to  be  people  of  high  reputation  and  character. 
In  all  other  cases  in  doing  business  with  the  markets  above  enumerated 
the  only  safe  plan  is  to  require  payment  for  the  goods  before  they  leave  an 
American  port. 

1  During  the  European  War  the  Entente  Allies  prohibited  the  use  of 
"order  bills  of  lading"  to  some  ports,  even  with  the  "notify"  clause,  be- 
cause they  insisted  upon  knowing  the  actual  consignees. 


^sl3 


American-Asiatic  Steamship  Co. 

12  BROADWAY,   NEW  YORK 


GENERAL  AGENTS 


New  York,  China,  Japan  and  London 

SHEWAN    TOMES    &.   CO. 

Agents  in  Singapore 

ADAMSDN,  GILFILLAN  &  CO.,  Ltd. 

Agents  in  Manila 

WARNER,  BARNES  &  CO.,  Ltd.  \ 


,^d^.^A^^*^ 


•■  % :....  ■■  •^..././: 


PREPAID 

•    • 


°  I  H  0  _5  a  i; 
S  •-  -^  .S  'a  S  '  I 


1 1  i ;  I  c  3  3 

•  =  Oij  StJ5  q 

"I  5  S  £  II  a 


jRl^rPtH^d  in  apparent  good  order  and  condition  from 


•' 


L  E:ASTc:aN 


^T'lLA  -^^*,*.-*«-^'k-tf-^    f  / 


being  marked  and  numbered  as 

hereinafter  mentioned  ia  like  appareat  good  ordei 
therefrom,  at  the  port  of 
r  their  assigns.  Freight  for  the  said  good! 

liberty  to  sail  with  or  without  pilots,   and 
the  owners  of  the  good 
ined  by  perils  of  the  sea 

ilry  of  the  Masiei  .     . 

inces.  rulers  or  people;  by  riois,   strikes,    or   stoppage   of  laboi 


of  the 
eight  and  valui 


That  General  Average  shall  be 
therein  to  be  signed,  also  sufficie 
manned,  equipped  and  supplied, 
in  the  steamer,  her  machinery  or 
able  by  the  exercise  of  due  dilig 
owner  in  General  Average  to  the 
all  with  the 


r  defet 


the  risk  of  th, 
or  damage  occasioned 
:raft  or  on  shore;  by  bai 

by  tlefect  in  any 

:h'ange  of  character,  drainage,  leakage,  breakage,  vermin, 

:au5ed  by  the  proloni 

'S,  1890,  and  as  to  m 
_  ,  .  =r  or  Agents.  If  thi 
of  danger,  damage  or  disaster, 

s  of  the  cargo  shall,  n< 
nses  of  a  General  Aver; 
iger.  damage  or  disaster 

s  subj 


ansbip  the  goods 


be  paid  by  the  sbippe 
pose  of  saving  life  or  pr. 


{'e  the  stear 
r  by  explosi 


of   ; 


of   the  I 


thereto  as  she  may  safely  get)  unioi 

n  New  York,  on  dehvcry  of  Bills  <rf  Lading,  in 

ty.  that  the  carrier  shall  have  tiberiy  to  convey 
sieamcrs  as  often  as  the  shipowner  elects. 

by   explosion;   by    bursting  of  boilers,    or   by  steam   however 
less  of  the  steamer,  whether  existing  at  time  of  ship- 

ar  for  land  dam- 


:a;  by  theft  by 
;  by  unseaworthiness  o'f  the 


York-/ 


hereby  agreed  that  i 


;aworthir 


eluded  as  to  the 
the  Port  of  New 


s  of  s 


of  quality. 

Bond  with  values  declared 
and  to  have  her  properly 
eamcr,  or  from  any  defect 


ay  salvage,  < 

ulted  from. 


rrcd^or'lhe 


in  respect  of  iHfe  t 


IT  IS  ALSO  MUTUALLY  AGREED  that  this  shipment 

of  the  United   States,  approved  on    the   13lh   day  of   February,    1893,    (; 

operate  to  limit  or  deprive  the  Shipowner  or  Carrier  of  any  Statutory  ftrotect 


lis  and  provisions  of,  and  all  the  exemptions  from  liability  contained  in  the  Act  of  Congress 
itled.  An  Act  Relating  to  Navigation  of  Vessels,  etc.),  and  nothing  in  this  Bill  of  Lading  shall 


1.— IT  IS  MUTUALLY 
■  freight  t 


that  the  value  of  the  goods 


:  of  : 


unless  the  value 
t  be  liable  for  Art 


pled  for  abo^fe  does  i 


ad  valorem  freight  paid  thereon. 
2.— ALSO,  that  the  steamer,  lighter  or  carrier  shall 
81  of  the  Revised  Statutes  of  the  United  Slates,  unless  written  notice  of  the 
;reof  is  given  at  the  time  of  lading  and  entered  in  the  Bill  of  Lading. 
3.— ALSO,  that  the  shippers  shall  be  liable  for  any  loss  or  damage 

■£ 


I^'  goods.*"  dec  fa"  ed"' 


Agent; 
Extra  .■ 
)nsiderc 


goods,    shipped 
nd  such   Broods   may 
for  dis 


ssly  stated  hert 
:]es  specified  in  Sect! 


full    disclosure   of    ' 


-ALSO,  that  the  < 


■  shall  1 


,  lighlei 


)ods   < 


ire  to  be  | 
wing  to  th 
)  be  subjec 


the 


5.— ALSO,  that 
le  usual  place  of  disc 

id  such  discharge  sb 
icurred  on  the  goods 
6. — ALSO,  that 


leh  the 

rinir  or  addre 

nth   th. 

_3nsular.   Board  of  Ilea 

icured  by  shi 

to  a  lien  tfierefor. 

n  case  the  ship  shall  be  prevented  fay 


.  such   by  civil  or  military  authorities  must   be 
:  goods  for  all  freights,  primages  and  charges. 


of  Heal 1 1 
detention. 


final   dcliv 


from  discharging  the  goods  £ 
,  and  all  the  expenses  ihercb 


bances,  blockade 

of  the  happening  of  an 
)therwisc,  and  whether  t 
he  judgment  of  the  Mai 


,  warlike  or  naval  i 


of  vessel  and/or 


learner,   her   Owners,   Agents  and    Master  shall  be   freed 

'  in  respect  thereof. 

ANSniPHENT  of  cargo  for  ports  where  the  ship  doe; 

:.,  ....-  -:  :U  .;.k  cf  the-owners  of  the  goods  aftei 

ons.  and  risk  of  warchou^iing  to  be  borne  by  consignee. 


nd  discharge  the  cargo,  or 
d  discharged  f^oi 


further  i 


.    lor  of 

mediately  after  the  entry  of 

be   found   during  Ship's  stay  at 

Ship's  expense. 

n  distinctly  and 

oi  ine  port  oi  aeslination.     Goods 

from  liability  for  any  loss,  depre- 

claims  for  short  delivery  of.  or  damage  to,  cargo  being  made,  the 
m  the  ret  invoice  price  plus  freight  and  insurance  less  all  charges 
hich  the  Carrier  may  be  liable  ! 

nor  the  Agents  shall  be  liable  for  any  claim  for  loss  of  o 

of  discharge  before  Ibe  removal   of  the   goods   from   the  ship's  custody.  < 

0.— ALSO,    that   merchandise  on   wharf   or   in   lighter   or    other   craft   shall   be   at   Merchandis 

[Vh'^lJee 


damage 


-ALSO,  thai  the 

f  chemical  products' 
lers  shall  not  be  hek 
■  proximity  to.  or  lli 
a.— ALSO,  thai  Cla; 


'„'^on° 


ificd       tl); 

,  barrel! 


of  ( 


■ond  ve5 


AND    PHILIP 


:  this  Bill  of  Ladi 


■  Cust 


I   Houst 


;red  frc 


jrdan. 


!  deliv 


!N  WITNESS  WHEREOO',  tb^  M; 
D^ted  In  Nen  York  tbis, 


under  this   Bill   of  Lading,  unless  \\ 
In  the  event  of  such  escepjjon  being  ta 
gents  at  ACnnila.  within 
Master   sha' 

ipmcnt 
ss  or  elsewhere;  and  in  the  event  of 
nd  shall  constitute  a  lien  on  the  good; 
g,   the   shipper,    owner    and   en 
.11  signed  by  such  shi 


s  deck,  whci 

for  ports  or 

,  and  HONG  KONG  CARGO 

regulations    of    the    Philippine 
the  custody  of  the  United   St 


;  of  s 


■  Clair 


risk  only,  the  s 

ipowner's  expense,  hut  plways  subject  to  cond 
hall  cease.     Goods  to  be  forwarded  as  suoii  aa 

e  shipowner  shall  not  be  deemed  to  be  the  Ager 

1  alongside  at  shipowner's  option  and  expense, 
ds.  Customs  Service,  cargo  is  to  be  conveyed 
Custom  House,  for  account  of  the  ( 


„  s,  and  il  is  agreed  that  ste: 
resulting  from  carriage  or  stot 


all 


I  be  held  rear 
ircd  by 


shall  be  liable  th< 

ds!^  cargo  or 
of  the  goods. 


after  the  completion  of  the  discharge  of  the   ■ 
ed  by  the  shipownei 


Agent  of  said   Ship  hath  aftirr 


..^mrr. .a..r.<<%J^«---<*>^ 


lart  of  it  being  forwarded  by  vei 
id  the  holder  of  the  Dill  of  Lad 
e' Bills  of  Lading,  all  of  this  ten 


f  (be  delivery,  by  the  Custoi 
sdelivery  of.  or  any 
default  of  sucb  not 


>  lost  ( 


if  there  be 


;  or  employees,  when  the  goods 
:argo.  sh.ill  be  presented  by  the 
1  shall  be  deemed  to  have  been 

I  forced  inierruptJon  or  abandon- 


els  of  the  same  Line,  or  otherwise,  the  cost  of  forwarding  shall  be  payable  by  the 
,g  agree  to  be  bound  by  all  its  stipulations,  exceptions  and  conditions,  whether  written 
r  and  date,  one  of  which  being  accomplished,  the  others  lo  stand  void, 

AMERICAN-ASIATIC   STEAMSHIP   CO. 


Form  16— Ocean  Bill  of  Lading. 


Pf?0.  FORMA 


.  For  Master 


\^ 


O 


MAKING  THE  SHIPMENT  419 

Such  claims  might  later  arise  through  the  actual  presentation  by 
others  of  the  missing  bills  of  lading.  Bonds  are  not  always 
easily  to  be  arranged  and  invariably  involve  expense,  nuisance 
and  delay.  When  a  shipper  has  forgotten  to  send  forward  the 
bills  of  lading,  or  has  neglected  necessary  endorsements,  the 
disposition  of  the  consignee  towards  him  may  be  guessed.^ 

Marks,  etc.,  on  Bills  of  Lading. — Space  at  the  left  of  bills  of 
lading  is  utilized  for  an  exact  reproduction  of  the  marks  and 
numbers  appearing  on  the  cases  represented  by  the  bill  of  lading. 
The  identical  repetition  of  marks,  etc.,  on  cases,  invoices  and 
bills  of  lading  should  once  more  be  emphasized.  The  shipper 
makes  out  the  whole  document  before  presentation  to  steamship 
agents,  excepting  only  calculations  for  weights  or  measurements 
and  extension  of  freight  charges  which  must  be  filled  in  by  the 
steamship  people  themselves.  For  the  rest,  the  blanks  pro- 
vided in  a  bill  of  lading  are  self-explanatory.  When  weights 
of  each  package  have  to  be  written  "as  per  endorsement,"  or 
when  a  large  number  of  packages  including  a  great  variety  of 
merchandise  is  shipped  on  one  bill  of  lading,  the  particulars 
may  be  written  on  the  back-  of  the  form. 

Styles  in  Bills  of  Lading-. — Bills  of  Lading  vary  in  form  ac- 
cording to  the  steamship  lines  which  issue  them,  sometimes  are 
modified  by  conditions  or  customs  at  port  of  destination.  There 
is  no  uniform  style.  They  are,  however,  usually  similar  so  far 
as  their  main  clauses  go.  They  seem  very  formidable  docu- 
ments containing  a  great  number  of  clauses  printed  in  such 
small  characters  that  it  is  almost  necessary  to  use  a  microscope 
to  read  them.  As  each  shipowner  drafts  his  own  form  of  bill  of 
lading  shippers  have  no  option  but  to  accept  it,  however  ob- 
jectionable its  clauses  may  seem.  It  should  be  observed,  how- 
ever, that  shipowners  do  not  always  interpret  these  clauses  ac- 
cording to  the  strict  letter  of  their  reading.  They  generally 
construe  them  liberally  when  reasonable  claims  are  made  in  a 
reasonable  way. 

Bill  of  Lading  Conditions  Explained. — Certain  phrases  in 
the  usual  forms  of  bills  of  lading  may  need  a  word  of  comment. 

1  In  Argentina,  when  bills  of  ladino;  have  been  issued  in  their  own  names, 
i.e.,  to  their  own  order,  consignees  can  obtain  shipments  without  present- 
ing documents  or  suffering  any  serious  formalities.  This  is  exceptional 
practice. 


420  PRACTICAL  EXPORTING 

"Shipped  in  good  order  and  condition"  applies  only  to  the 
external  appearance  of  the  packages.  Courts  of  law  of  all 
countries  have  held  that  the  steamer's  owners  cannot  be  ex- 
pected to  know  the  condition  of  goods  contained  therein. 

"Quality,  quantity,  gauge,  contents,  weight  and  value  un- 
known" is  a  provision  intended  to  signify  that  no  matter  what 
the  shipper  himself  says  when  he  makes  out  the  bill  of  lading 
the  steamship  owner  reserves  his  rights  in  these  respects  and 
will  assume  no  responsibility  for  claims  in  such  particulars. 

"Clean"  Bills  of  Lading. — Shipowners  are  responsible  for 
damage  to  the  goods,  other  than  that  covered  by  the  clauses  in 
the  bill  of  lading.  Therefore,  when  a  package  is  found  to  be 
chafed,  broken,  in  any  way  damaged  or  even  weak,  when  the 
goods  are  received  on  board,  such  facts  are  noted  on  the  dock 
receipt  and  subsequently  on  the  bill  of  lading  also  which  is 
then  called  a  "foul"  bill  of  lading.  A  bank  always  looks  with 
suspicion  upon  a  "foul"  bill  of  lading  because  a  claim,  whether 
justifiable  or  not,  is  morally  certain  to  be  made  on  arrival  of 
the  goods. 

Large  New  York  exporters,  constantly  making  shipments  by 
certain  lines  of  steamers,  always  lodge  permanent  instructions 
with  the  receiving  clerks  at  docks  of  the  steamship  companies 
chiefly  patronized  forbidding  them  to  put  on  board  vessel  any 
packages  for  which  a  "clean"  bill  of  lading  cannot  be  issued. 
Receiving  clerks  are  instructed  to  'phone  the  shippers  or  advise 
them  by  letter  of  the  facts  and  new  cases  will  be  supplied,  or 
old  and  weak  ones  coopered  in  order  to  put  them  in  such  con- 
dition that  a  clean  bill  of  lading  can  be  issued.  It  should  also 
be  the  duty  of  shipping  agents  employed  by  inland  manufac- 
turers thus  to  safeguard  their  principals'  interests  in  making 
sure  that  only  goods  properly  packed,  for  which  a  clean  bill  of 
lading  can  be  issued,  will  be  forwarded. 

In  making  occasional  shipments  the  drayman's  receipt  or  a 
separate  notification  to  be  delivered  by  him  with  the  goods,  may 
contain  printed  instructions  like  the  following:  "This  cargo 
is  only  shipped  on  the  distinct  understanding  that  a  receipt  will 
be  given  for  all  counter  or  qualifying  marks  and  numbers.  The 
packages  are  not  to  be  taken  on  board  except  on  these  terms." 
Or,    in   language    similar   to   the    following:     "The   Receiving 


THE  NEW  YORK  &  PACIFIC  STEAMSHIP  COMPANY  Limited. 

HANOVER  SQ,  NEW  YORK. 


MAKING  THE  SHIPMENT  421 

Clerk  is  requested  not  to  take  in  any  package  unless  he  is  pre- 
pared to  sign  for  all  the  qualifying  marks  and  numbers.  All 
packages  in  bad  order  must  be  returned." 

Sometimes  a  Dock  Receipt  will  be  returned  quite  unexpectedly 
endorsed  "one  case  weak,"  "one  crate  broken,"  "one  bale 
chafed,"  or  something  of  that  sort.  The  exporter,  hastening  to 
make  inquiry,  will  find  that  the  shipment  has  already  been 
loaded  on  board  vessel  and  cannot  be  reached.  The  bill  of 
lading  when  issued  will  bear  the  same  undesirable  notation 
unless  steps  are  taken  to  prevent  it.  The  steamship  agents  may 
sometimes  be  induced  to  issue  a  clean  bill  of  lading  in  such  cases, 
if  they  are  given  a  "letter  of  indemnity."  Such  a  letter  may 
read :     "In  consideration  of  your  signing  clean  bill  of  lading 

for  shipped  by  us  per  S.  S.  ,  the  Dock  Receipt  for 

which  reads  'one  crate  broken,'  we  hereby  undertake  to  in- 
demnify you  against  any  claims  that  may  be  made  on  account 
thereof  on  arrival  of  the  vessel  at . " 

If  such  a  letter  is  accepted,  it  is  attached  to  the  ship's  copy 
of  the  bill  of  lading  in  question,  and  if  a  claim  is  made  on  ar- 
rival at  destination  in  respect  of  such  damage,  it  is  paid  by  the 
shipowners  and  recovered  by  them  from  the  shippers.  The 
latter  do  not  escape  liability ;  but  the  clean  bill  of  lading  which 
is  issued  does  not  arouse  suspicion  or  prompt  claims.  INIeans, 
however,  ought  always  to  be  adopted  to  prevent  loading  of  dam- 
aged or  weak  packages. 

Liabilities  of  Shipov^rners. — Quite  unlike  railways  the  liability 
of  shipowners  is  strictly  limited.  To  get  due  protection  for  the 
value  of  their  shipments  manufacturers  or  exporters  must  in- 
sure their  goods.  The  Harter  Act,  as  passed  some  years,  ago  by 
Congress,  allows  cargo  carriers  to  exempt  themselves  from 
liability,  as  they  stipulate  in  the  usual  ocean  bill  of  lading.  The 
statute  was  adopted  in  order  that  American  steamship  compa- 
nies might  be  better  able  to  compete  with  those  of  other  nations. 
Several  important  maritime  countries,  notably  Great  Britain, 
already  had  such  statutes  in  force  and  vessels  were  thus  enabled 
to  take  their  freights  at  lower  rates  than  they  could  afford  on 
ours,  on  account  of  greater  liability  for  American  cargoes.  The 
shipowner,  however,  is  bound  to  see  that  his  vessel  is  seaworthy 
at  the  beginning  of  the  voyage  and  is  free  from  all  defects, 


422  PRACTICAL  EXPORTING 

latent  or  otherwise.  If  there  is  an  explosion,  the  bursting  of  a 
boiler,  breakage  of  a  shaft,  etc.,  arising  entirely  out  of  some- 
thing that  happened  after  the  voyage  began,  the  carrier  is  re- 
lieved of  liability  by  this  provision  of  his  contract.  If  investi- 
gation shows,  however,  that  the  damage  arose  wholly  or  partly 
from  some  defect,  even  a  latent  defect,  which  was  in  existence 
at  the  beginning  of  the  voyage,  then  the  carrier  is  liable. 

A  bill  of  lading  is  both  a  receipt  for  goods  and  a  contract  to 
carry  them  as  explained  by  the  Journal  of  Commerce.  As  a  con- 
tract it  is  binding  upon  the  carrier  according  to  the  strictest 
construction  of  its  terms.  As  a  receipt  it  is  like  any  other 
receipt  and  may  be  explained  away.  When  duly  signed  it  is 
strong  prima  facie  evidence  against  the  steamship  company,  but 
if  the  latter  can  show,  for  example,  that  the  number  of  packages 
described  was  wrong  by  mistake  and  that  a  smaller  number 
only  were  in  fact  received,  such  a  condition  is  regarded  as  one 
which  the  shipper,  himself  or  through  his  agents,  was  legally 
open  to  have  known  and  is  conclusively  presumed  to  have  known. 

Attention  should  be  drawn  to  a  clause  in  some  steamship  bills 
of  lading  reading  to  this  effect:  *'The  amount  of  any  loss  or 
damage  for  which  any  carrier  is  liable  shall  be  computed  on 
the  basis  of  the  value  of  the  property  (being  the  bona  fide  in- 
voice price,  if  any,  to  the  consignee,  including  the  freight  charges 
if  prepaid)  at  the  place  and  time  of  shipment  under  this  bill 
of  lading."  This  it  will  be  noted  precludes  any  claim  for  settle- 
ment so  far  as  the  shipowner  is  concerned,  on  the  basis  of  what 
may  be  claimed  to  be  the  market  price  of  the  goods  at  point  of 
delivery.  More  often,  nowadays,  steamship  companies'  docu- 
ments make  them  responsible  for  "market  price  at  port  of  des- 
tination on  the  day  of  steamer's  entry  at  the  Custom  House." 

Parcel  Receipts. — A  good  many  but  not  all  steamship  com- 
panies offer  facilities  for  shipping  small  packages  of  insignifi- 
cant value  under  what  is  known  as  a  Parcel  Keceipt.^  This 
form  was  originated  for  the  purpose  of  giving  shippers  an  oppor- 
tunity of  putting  in  possession  of  their  foreign  consignees 
samples  of  goods  shipped  by  the  same  vessel  under  regular  bills 
of  lading,  before  delivery  of  the  actual  goods  could  be  made. 
Parcels  thus  shipped  are  carried  separately  from  general  cargo 

1  See  Form  18. 


PARCEL  RECEIPT  FOR  PACKAGES  NOT  EXCEEDING  £5  VALUATION. 

BARBER  &  CO.,  Inc. 

Steamship  Agents 

Whitehall  Buildintr.  17  Battery  PUce 

New  York, AUgUfl.t...l.7 19 

Received  in   apparent  good  order  and  condition  from 
^--r..r..r:--..-....ThOInp.a.Qll...(S^...Caxieton  ..-.~-.----^^  macked  or  addressed  as 

der,  for  shipment  per  S.  S ".B.Ol.t.0.n...Caa.tle.". to Sliangliai , 

bject  to  the  following  conditions:  Freight.— ——.r.r'.—$l.r.r:.r..r.  —  ~.r.— paid  at  New  York. 

IT  IS  MUTUALLY  AOREED  that  this  shipment  It  subject  to  all  lerms  and  conditions  contained  In  Steamers  Bill  of  Ladine. 

In  no  case  is  value  to  exceed  Five  Pounds.  It  is  distinctly  understood  that  if  the  above  package  contains  packages 
Sressed  to  other  parties,  each  package  so  addressed  will  be  charged  freight  as  above,  payment  for  which  will  be  reqnired 
iore  deliverj'.     Duties  and  Customs  charges  to  be  paid  by  Consignee  asL usual. 

If  goods  are  carried  "freight  free,"  the  owner  of  within  described  property  in  accepting  same,  agree  to  relieve  said 
amship  and  owners  of  all  responsibility  for  loss  of  or  detriment,  damage  or  delay  to  said  property. 


DESCRIPTION 


One  (1)   Case  Typewriter  Ribbons 


Shanghai 


M.  O'Briain. 


^^0 


fO^^ 


L\«> 


..for  Master. 


Form  18 — Steamship  Parcel  Receipt. 

Some,  but  not  all,  steamship  companies  issue  Parcel  Receipts,  similar  in  a 
general  way  to  that  illustrated,  covering  packages  of  limited  size  and  insig- 
nificant value,  for  which  a  reduced  freight  charge  is  made. 


are  reqiiireci  oy  practical ly  an  ijanu  American  republics  and 


^  oee  r  ui  ui  lo. 


MAKING  THE  SHIPMEXT  423 

and  are  more  promptly  delivered.  The  real  origin  of  the  prac- 
tice was  to  favor  English  shippers  of  piece-goods.  A  small  col- 
lection of  swatches,  or  sample  clippings,  of  the  goods  shipped  as 
cargo  is  despatched  under  parcel  receipt  and  promptly  upon 
arrival  of  the  vessel  is  delivered  to  consignees,  who  thus  have 
an  opportunity  of  taking  actual  samples  of  the  goods  to  their 
customers  and  selling  the  stocks  of  those  goods  while  the  cargo 
itself  is  in  process  of  discharge  and  clearance  through  Custom 
House,  which  may  sometimes  occupy  a  month  or  more. 

Parcel  receipts,  however,  may  sometimes  be  used  in  other 
ways,  even  for  small  packages  of  general  goods,  providing  the 
value  is  not  considerable.  The  steamship  companies  offering 
this  facility  restrict  the  size  and  value  of  such  parcels,  and  as 
the  parcel  receipt  is  regarded  as  a  favor  or  courtesy  and  not 
as  an  established  custom,  the  companies  reserve  the  right  to  re- 
fuse to  accept  packages  tendered  for  transportation  under 
them.  They  often  exercise  this  right  when  they  feel  that  they 
have  been  imposed  upon  through  misrepresentation  of  values,  or 
something  of  that  sort.  Because  Parcel  Receipts  cannot  be 
regularly  or  even  frequently  used,  and  because  of  limits  as  to 
size  and  value,  they  are  not  dependable  as  an  escape  from  mini- 
mum bills  of  lading  or  forwarding  agents'  services. 

Regulations  of  the  companies  affecting  parcel  receipts  differ 
widely  both  as  to  size  of  packages  that  will  be  accepted  and 
their  value.  Rarely  is  a  package  measuring  more  than  3  or  5 
cubic  feet  accepted,  and  between  $10  and  $50  is  perhaps  the 
usual  limit  of  value  for  such  packages.  Charges  are  generally 
much  less  than  for  a  minimum  bill  of  lading,  but  the  parcel 
receipt  does  not  answer  the  same  purpose. 

IMuch  less  responsibility  is  assumed  by  steamship  companies 
under  parcel  receipt  than  under  bill  of  lading.  The  parcel  re- 
ceipt may,  however,  be  used  for  banking  purposes,  although 
seldom  so  utilized  because  of  the  limited  value  of  the  property 
thus  covered. 

CONSULAR  INVOICES  AND  SIMILAR  DOCUMENTS 

Nuisances  as  they  are,  we  Americans  cannot  complain  of  the 
somewhat  formidable  documents  called  consular  invoices  which 
are  required  by  practically  all  Latin  American  republics  and 


424  PRACTICAL  EXPORTING 

by  Portugal  and  a  few  other  countries,  when  goods  are  shipped 
to  them.  The  United  States  Government  requires  that  quite  as 
intricate  and  puzzling  papers  accompany  all  imports  of  foreign 
goods  into  this  country.  The  income  from  fees  to  American 
consuls,  paid  according  to  our  law  by  foreign  shippers  for  cer- 
tifying such  invoices,  pretty  nearly  covers  the  whole  cost  of 
the  American  consular  service.  In  the  case  of  some  of  the  Latin 
American  countries  it  is  suspected  that  their  consuls  receive  no 
other  remuneration  than  the  fees  for  certifying  such  documents, 
which  they  are  permitted  to  retain.  Documents  falling  under 
this  general  head  are  of  several  sorts — the  consular  invoice 
proper,  consular  attestation  of  usual  invoice  or  certification  of 
ocean  bill  of  lading,  certificates  of  origin,  non-dumping  certif- 
icates, etc. 

Minute  Exactness  Required. — Emphasis  has  already  repeat- 
edly been  placed  on  the  imperative  necessity  of  exactness  in 
every  detail  of  export  trade  relations.  In  no  other  phase  of 
such  relations  is  exactness  so  essential  as  in  the  preparation  of 
consular  invoices.  No  indefinite  or  inexact  statements  are  to 
be  tolerated.  No  corrections  or  interlineations  are  to  be  made. 
The  smallest  mistake  on  the  part  of  the  shipper  in  making  out 
these  documents  may  be  punishable  by  exceedingly  lieavy  fines 
on  the  foreign  importer,  the  American  manufacturer's  customer, 
which  are  certain  to  react  on  the  shippers. 

In  doing  business  with  countries  where  documents  of  this 
sort  are  required,  customers  or  prospects  should  be  asked  and 
expected  to  give  definite  instructions  as  to  how  goods  are  to  be 
invoiced.  It  is  wiser  to  follow  instructions  received  from  cus- 
tomers rather  than  to  take  any  one's  advice  at  this  end  of  the 
line,  even  the  advice  of  a  consul  of  the  country  in  question.  The 
manufacturer  should  specifically  exempt  himself  from  all  re- 
sponsibility if  he  exactly  follows  his  customer's  instructions,  or 
in  the  absence  of  any  instructions,  is  forced  to  follow  his  own 
best  judgment,  relying  on  the  advice  of  consuls  or  others. 

Consular  Invoices.^ — A  consular  invoice  is  a  document  cover- 
ing all  the  customary  details  of  any  invoice  and  sometimes 
others,  which  is  usually  printed  in  the  language  of  the  country 
of  destination  of  the  goods,  must  be  fully  and  accurately  pre- 

1  See  specimens,  Forms  19  and  20. 


New   Yorh, 7,.de   AgQato.. 

jy^tUiV^   de  mercancias  embareadas  por _ Sani-taiy...- Deaic.C.Q*- 

d  hordo  de ".P.ftH.lt.OX.eft'' con  destino  BJ .'.^ret°°.tlabaiia. 

INii»cor»™ol  (Pon) 

por  euenta  y  riesgo  de.- — _Jta.t.aillQra8  ...y ...Ciaj. 

(For  wbo-a  Kcoatil  and  riik  ihipmeni  ii  nide) 

y  d  la  emiignaciim  de  XOB   mlsinO& - - - 


L^ 


Habana 


#387  Esoritorloe  a  oortina,de  roble 
#043       "  "         • 

#6241  Esoritorioa  de  roble  para 
maqulnae  de  eecrlblr 


540 
733 


750 


491 
597 


603 


39.7 
14.5CI 


19.75 


$89 

87 


35 
00 


Declare  que  soy  ci XabrlQante 

ciertos  los  precios  y  demas  particulares  que  en  ella  se  i 
del  suelo  u  de  la  industria  de  los  Estados  Unidos  de  An 


de  las  mercancias  relacionadas  en  la  prcsente  factura  y  que  son 

;ienan,  *  y  que  las  mercancias  contenidas  en  dicha  factura  son  producto 


Declaro  que  soy  el  Agente  aulorizado  por  Don — - - que  ha  suscritn  la  anterior 

dedaracion,  para  presentar  esta  faciura  en  la  Ofrcina  Consular  de  Cuba  en  esta  plaza,  a  fin  de  que  sea  certiBcada. 


^fcX-*w^ 


Form  19— Consular  Invoice,  Cuban  Form. 


required  hy  moat  Latin   . 


MAKING  TEE  SHIPMENT  425 

pared  in  the  same  language  and  presented  and  sworn  to  by  the 
shipper  in  person,  or  by  some  authorized  representative  of  his, 
at  the  consulate  of  the  country  of  destination  in  the  American 
port  of  shipment.  The  number  of  copies  of  such  a  document 
which  are  required  in  different  countries  varies  from  two  to 
eight.  Sometimes  the  forms  are  to  be  purchased  from  the  con- 
suls in  question,  sometimes  they  must  be  obtained  from  certain 
stationers  authorized  to  sell  them. 

Fees  of  consuls  for  certifying  such  invoices  are  most  often 
graded  according  to  the  value  of  each  shipment.  Usually  the 
consul  retains  copies  for  himself  and  for  despatch  to  the  cus- 
tom house  of  his  country  to  which  the  goods  are  bound,  or  the 
bill  of  lading  will  not  be  signed  by  steamship  companies  without 
the  production  of  a  duly  attested  consular  invoice.  It  should 
be  noted  that  consular  invoices  are  not  required  to  accompany 
packages  sent  by  parcel  post,  excepting  only  in  the  cases  of 
Cuba,  Bolivia,  when  value  exceeds  $100,  of  Nicaragua  if  value 
amounts  to  $50,  Chile,  charge  made  only  if  the  value  is  $24.33, 
and  Haiti.     A  Certificate  of  Origin  is  required  for  Uruguay, 

Description  of  Goods  in  Consular  Invoices. — It  is  in  the 
classification  of  goods  in  these  consular  invoices  that  there  exists 
the  greatest  opportunity  for  costly  mistakes.  The  author  when 
visiting  Venezuela  a  year  or  two  ago  wrote  in  this  regard : 
Goods  must  be  described  in  strictest  accordance  with  the  official 
classification  and  nomenclature.  If  nails,  for  example,  are  called 
spikes  and  manifested  as  coming  under  Class  II  instead  of  Class 
III  of  the  Venezuelan  tariff,  the  result  will  be  that  the  unfor- 
tunate importer  of  the  goods  must  not  only  pay  the  duty  on  the 
class  in  which  the  goods  are  manifested,  but  a  fine  equal  to  the 
duty  on  the  class  in  which  they  ought  to  have  been  manifested. 
Moreover,  in  addition,  the  importer  loses  the  goods  which  are 
confiscated  by  the  Government,  afterward  to  be  sold  at  auction 
for  its  own  benefit.  Since  the  amount  of  the  fine  imposed  goes 
to  the  man  who  discovers  and  reports  the  mistake,  there  are 
very  few  mistakes  indeed  that  pass  unnoticed. 

Certificates  of  Origin. — A  good  many  countries  make  in  their 
tariff'  laws  what  they  call  two  columns  of  duties,  one  being  a 
general  duty,  and  the  other,  called  the  "most  favored  nation 
column, ' '  applying  to  the  products  of  nations  with  whom  special 


426 


PRACTICAL  EXPORTING 


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MAKING  THE  SHIPMENT 


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428  PRACTICAL  EXPORTING 

treaties  have  been  negotiated.  In. order  to  take  advantage  of 
the  lower  rates  of  the  most  favored  nation  column,  it  is  neces- 
sary that  goods  from  countries  subject  to  these  rates  be  accom- 
panied by  what  is  known  as  a  certificate  of  origin,  that  is — 
as  refers  to  us — a  document  certifying  that  the  goods  in  ques- 
tion are  the  product  or  manufacture  of  the  United  States  and  of 
no  other  country. 

In  the  case  of  certain  markets  no  special  documents  of  this 
sort  are  required  because  the  point  is  covered  by  the  usual 
consular  invoice,  as  for  example  in  Cuba  and  Brazil.  Ship- 
ments to  other  countries  which  do  not  require  consular  invoices 
may  have  to  be  accompanied  by  certificates  of  origin  when 
certain  goods  are  in  question  which  are  entitled  to  specially 
favorable  tariff  treatment.  This  particularly  applies  to  goods 
shipped  to  France  and  Japan,  with  which  countries  treaties  have 
been  negotiated  admitting  at  low  tariff  rates  certain  kinds  of 
American  goods. ^ 

"Non-Dumping"  Certificates. — Certain  British  colonies  at 
tempt  to  guard  against  the  "dumping"  of  foreign  goods  into 
their  markets  at  exceptionally  low  prices,  or  at  rates  less  than 
cost  of  production,  by  requiring  from  shipj)ers  certificates  to 
the  effect  that  the  invoice  prices  are  the  customary  prices  in 
country  of  origin.  The  colonies  in  question  are  Australia,  New 
Zealand,  South  Africa  and  Canada. 

The  customary  phraseology  of  such  certificates  is  self-explana- 
tory. For  shipments  to  the  Union  of  South  Africa  invoices 
must  bear  the  following  notation: 

**I declare  that  the  subjoined  statement  of  Values  and 

Costs  is  accurately  given  in  conformity  with  the  requirements 
of  the  Customs  Tariff  of  the  Union  of  South  Africa  Act  No.  26 

of  1914:     (1)  Home  consumption  value Less  home  trade 

discounts Net   Value Packing Cost    of 

carriage  to  port  of  shipment  as  represented  by  railage 

Shipping    charges,    excluding   wharfage    and    lighterage 

Total (2)   Actual  cost  of  goods  at  port  of  shipment  to 

importer  in  South  Africa  (i.e.,  actual  cost  delivered  into  dock 
sheds)." 

The  value  declared  must  be  the  "true  current  value"  of  the 

iSee  Form  21. 


MAVTTda   TTTJP    fiTTTPHrF.?jr 


429 


'^' 


Mar.    O'?'''^* 
Unidades 
*  da  Tarifa 
Kumi 

Mark'    9t^f'■  , 

.unities  of 

Numlthe  Tariff 


Valor  parcial  declarado 

por  artigo  inclusive 

ou  exclusive  frete 

e  despezas, 

Specified  value  of  each 
"article  inclusive  or  ex- 
clusive of  freight 
and  charges 


Paiz  de  origem 
de  cada  artigo 


Country  of 

origin  of  each 

article 


ards 

Lqb... lao-O— 


.7.05 


.6Q_ 


U«S,Qf  A> 


u 

tt 


F ACTU  R A 


""aiin 

p,°'™" 

specification  of  the  merchandise,  in  conformity  with  letter  K.  art.  13,  of  Inw  n,  1103.  dated 

"::°i!°:::.r" 

ia? 

n'o".-SS.^:i 

i-° 

P.iadeori,eo 

1  '° 

a  1 

^^L 

M^chand^^ 

do';'Anfe°o. 

■"^iS^Hr 

oSsH^h 

y\ 

— 

X36  / 

N^ 

[qs.   1  -jS 

6 

8_ 

Bales.. 

1147 

Tfinn 

Yards 
4flnn 

|AS3 
705 

U.S. of   A 

'OS.    7   -14 

1390 

Tsnn 

SiJQD 

ir.R.of  A 

.,' 

— 

Form  20 — Consular  Invoice,  Brazilian  Form. 


o 


Via  FACTURA  CONSULAR  BRAZILEIRA  (BRAZILIAN  CONSULAR  INVOICE) 

n 

(Tonsulabo  Geral  em  IHova  l^orh. 

DECLARACAO     (DECLARATION) 

Declaramos  solemnemenle  que  somas  exporladores  ou  carregadores 
Wl  solimnly         declare         that         W!       arc       the       exporters       or       shippers 

das  mercadorias  ntencionadas  nesta  factura  conlidas  nos        14 volumes 

.X      *!..      M^.^^ti^iJifj       eJirrHl*it      in      tJtit      invoiee      fntti/iinfd     in     the  liacka^CS 


of    the    merchandise    specified 

indicados,     a     gual    i     exacla      e      verdadcira 
indicated,  which  iS'         in  all  respects 


todos      OS 
ue  and 


packages 
effeilos 


sendo  essas  mercadorias  destinadas  ao  porta  de 
this      merchandise      being      destined      to      the     port     o/ 

do  Brazil  e   consignadas  aos  Sres. 
Brazil      and       consigned       to       Messrs. 

de Sa.nJLQS j< 

0/ 

Neva  Vork 6  dc       July 


Da  Silya_4_flaj 


de  igi 


yr5^7..,,...i?iS.<-^<)!?'^Sft^*^  A^ente  do  Expovtador 

Agent     of     Exporter 


JV7*,«.*   *    ^^^l^^^UJ^J^   J^   «^«./*.  J  I'^U 

Name  and  nationality  of  sailing  vessel 

Nome  e  nacionalidade  do  navio  d  vapor ^iiinaa. 

Name  and  nationality  of  steamer 

Porto  do  embarque  da  mevcadoria IISW   Yoxk 

Port  of  shipment  of  the  merchandise 

Porto  do  destino  da  mercadoria ScWltita 

Port  of  destination  of  the  merchandise 

Porto  do  destino  da  mercadoria 

Port  of  destination  of  the  merchandise 


Brazilian... 


com  opfdo  pa 
with  option  for 


..em  transito para.. 

in  transit  for 


Porto  do  destino  da  mercadoria 

Port  of  destination  of  the  merchandise 

Valor  total  da  factura  inclusive  frete  e  despezas  approximadas  $  ..1X67.86_.. 

Total  value  of  the  invoice  inclusive  of  approximate  freight  and  charges 

Frete  e  despezas  approximadas  $ 38*90 

Approximate  freight  and  shipping  charges 

Agio  da  moeda  do  paiz  de  procedendo _ 

Exchange  of  the  country  whence  exported 

OBSERVACOES     DO     CONSUL 


I 


Pagou  $1.65 


VISTO.    Consulado  Qeral  do»  E.  U.  do  BraslI 

de  191 


428 


PRACTIC AT,  FTPnvTTNrL 


< 


'Sl.^ 


let- 
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ID 


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9»« 


C 


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«» 

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a  to 


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to 

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> 


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MAKING  THE  SHIPMENT 


429 


CERTIFICAT  D'ORIQINE 

,  Certificate  of  Origin 

Nous  soussignis, ",!  D....P....Edgar^  .  A  gent... d  6. 

The     undersigned  (Owner  or  Agent,  or  &c.) 

.Px.of.il.e...T.y.pesirriter  Co.,. Detroit^ -Mich* 

(Name  and  address  of  Owner  or  Shippier) 

qiie  les  Marchandises  ci-aprds  designees, 
tliat  the  following  mentioned  goods 


(for) 

^D4clar 
Dectar 


NOMBRE    DR 

PAQUETS    CO 

COUS 

on 

CAISSES 

Number  of 

Packages 

Boxes  or  Cases 


MARQUES 
Marks 


NOMBRES 
Numbers 


POIDS 
Weight 


BRUT 
Gross 


NET 


DESCRIPTION 


30 


X/30 


PARIS 


Kilos 


918 


Kilos 


526i 


Machines  at 
ecrire 


et  embarquees  sur  le  S.  S. .".Efl.paigll.6.**. 

And   shipped    on  the  S.  S.  (Name  of  Ship) 

d  la  date   diilO.JulllQtadressieadM.  M...J.0.Ul3.e.rt    Fr.C.r eS^.Paril 


on  the  date  of 


(date) 


consigned  to 


(Name  and  Address  of  Consignee) 


Prete    serinenl    devant    moi. 
Sworn  to  before  me 

celQ ioMr...Juill.et 


»his  day 


>^0 


^0^' 


.^'^ 


sont     le     produit     des     Etats     Unis     d'Amenq 
are         the      product      of  the    United      States        of  Amtric 

Fait  a  New  York  ?e....XO....J.UilI.e.t...... 

Dated  at  New  York  on  the  (date) 


(Signature) 


^ 


CERTIFICAT  D'ORIQINE 

Kom  soimignit '..  D.-  -P..   Edgar,  Agent...de.. 


Profile  Typewriter  Co.,  Detroit,  Mich, 


30 


/  C^.  1/30 


PARIS 


Kilos 


918 


526i 


Machines  d 
ecrire 


"Espagne." 


et  emharqiih-s  sur  le  • 
And   shipped   on  the 

d  (a  date  di.  10  Juille.t  "rf"''^"  a  Jtf.  itf.J.Qu'b.er.t,  ,Fre.re8,PariB, 


Pr&U    nernient    devaiit 


ao.^^^.y^r.juillet 


,^0 


^0^^ 


a^' 


Fait  a  New  York  ie .  .10.  Juil let- 
Doled  ot  New  York  on  the  (datel 


HOTARY    PUBLIC 


y^  /^/CyO>^^ 


T 


MEW  YOBK  COUNTY   No- ., 

"  "      REGISTER  Wo.Al^i.L 


• 


ffOOllB 

TT 

Form  21- 

-Certificate  of 

Origin. 

efnre  n  Notary  Public 
tod  States.' is  roi|uir 

'tb; 

lowest  rates  of 

ppod  to  some   countr 
doty. 

r 


MAKING  THE  SHIPMENT  429 

goods  in  the  United  States,  the  discounts  shown  must  be  the  same 
as  those  granted  on  similar  quantities  sold  for  consumption  in 
the  United  States.  Actual  cost  of  packing,  also  of  forwarding 
must  be  declared.  The  declaration  must  be  signed  by  the  prin- 
cipal, or  the  director,  manager  or  secretary  of  the  exporting 
concern.  A  declaration  of  similar  character  is  required  in  the 
case  of  shipments  to  Australia  or  New  Zealand.  A  more  elabo- 
rate certificate  is  required  in  the  case  of  shipments  to  Canada 
but  the  intent  is  the  same.^  Regular  shippers  often  print  the 
form  at  foot  of,  or  on  reverse  side  of  invoices. 

Rates  of  Duty  Under  Foreign  Tariffs. — At  this  point  it  is 
advisable  to  remark  that  ordinary  inquiries  as  to  the  rate  of 
duty  which  will  be  assessed  on  any  given  article  when  imported 
into  most  of  the  Latin  American  republics  are  entirely  useless 
because,  among  other  reasons,  the  tariffs  of  these  republics  are 
constantly  changing.  They  are  almost  invariably  subject  to 
temporary  surcharges  imposed  from  time  to  time  and  nomi- 
nally only  for  certain  periods,  or  to  meet  sundry  expenses,  such 
as  the  building  of  a  national  theater,  the  construction  of  port 
works  or  the  equipment  of  a  military  force  to  put  down  an  in- 
cipient revolution.  Sometimes  there  may  be  half  a  dozen  such 
surcharges. 

In  principle,  in  regard  to  the  tariff  of  any  foreign  country, 
it  is  seldom  possible  for  any  one  who  has  not  had  actual  per- 
sonal experience  in  the  country  about  which  inquiry  is  made, 
and  in  the  importation  into  that  country  of  the  identical  article 
in  question,  to  make  any  definite  statement  in  regard  to  the 
exact  rate  of  duty  which  will  be  imposed.  Printed  tariff  laws 
are,  in  every  country  of  the  world,  subject  to  myriads  of  ex- 
ceptions and  special  rulings  just  exactly  as  are  our  own  laws 
in  the  United  States,  as  witnessed  by  the  endless  procession  of 
our  Customs  Court  and  Treasury  Department  decisions.  The 
only  way  of  definitely  learning  just  what  duty  will  be  applied 
in  any  country  is  by  submitting  actual  samples  of  the  goods 
to  the  competent  custom  house  officials  in  the  country  about 
which  inquiry  is  made,  obtaining  an  official  ruling.     Even  this 

iThe  official  form  of  invoice  for  Canada,  known  as  Form  1-M,  may  be 
obtained  from  any  British  consulate  as  well  as  up-to-date  instructions  as  to 
phraseology  of  declarations  for  South  Africa,  Australia  and  New  Zealand. 


430  PRACTICAL  EXPORTING 

does  not  always  suffice.  In  so  highly  civilized  a  country  as 
France  instances  have  been  known  where  official  rulings  have 
thus  been  obtained,  but  when  the  goods  were  actually  imported 
heavy  fines  have  been  imposed  for  wrong  declaration,  ap- 
parently through  the  complicity  of  custom  house  officials.  In  a 
great  many  countries  half  if  not  all  of  fines  imposed  go  to  the 
officials  who  discover  the  mistakes. 

Tariff  Treatment  of  American  Goods. — As  a  matter  of  fact 
it  is  only  rarely  the  case  that  an  American  manufacturer  has 
any  real  interest  in  the  rate  of  duty  which  will  be  charged  on 
his  goods  in  any  foreign  market.  It  is  the  business  of  his  cus- 
tomers, importers  in  such  markets,  to  know  all  about  the  duties 
which  they  will  have  to  pay.  As  a  rule,  the  manufacturer's 
only  interest  in  such  regards  is  to  loiow  that  American  goods 
of  the  sort  in  which  he  is  interested  are  subject  to  the  same 
duties  as  are  any  other  foreign  goods,  that  there  is  no  dis- 
crimination against  his  products.  This  may  be  said  in  a  gen- 
eral way  to  be  the  case  in  every  country  with  which  we  do  busi- 
ness. 

In  some  countries,  indeed,  American  goods  receive  especially 
favorable  treatment.  For  example,  they  enjoy  a  20  per  cent, 
reduction  in  duty  when  imported  into  Cuba,  and  certain  of 
our  products  are  granted  tariff  favors  in  Brazil  and  in  Nica- 
ragua which  similar  goods  manufactured  in  other  countries  do 
not  receive.  A  certain  discrimination  against  American  goods 
exists  in  some  of  the  British  Colonies  where  a  tariff  preference 
ranging  from  3  per  cent,  to  10  per  cent,  in  the  duties  is  ex- 
tended to  the  products  of  the  mother  country  or  of  sister  colo- 
nies. It  is  a  notable  fact,  however,  that  despite  these  prefer- 
ences for  British  goods,  British  trade  has  not  increased  at 
more  than  the  normal  rate,  while  American  trade  had  grown  far 
more  rapidly  and  even  in  the  very  articles  which  the  preference 
was  intended  to  cover  before  the  war  forced  new  trade  to  us. 

Study  of  Foreign  Tariffs  Often  Profitless. — The  reader  will 
do  well  neither  to  attach  importance  to  rates  of  foreign  duties 
on  his  goods  nor  attempt  to  study  them  out.  The  rate  of  duty 
as  affecting  possibility  of  making  sales  is  rarely  even  of  inter- 
est to  the  average  American  manufacturer  save  when  he  is  con- 
templating competition  in  a  foreign  country  with  big  or  im- 


MAKING  THE  SSHIPMENT  431 

portant  native  factories.  lu  such  a  case  customers,  prospects 
or  agents  on  the  ground  can  advise  far  more  intelligently  than 
can  any  independent  study  he  himself  may  try  to  make — espe- 
cially as  there  are  landing  charges,  brokerage  and  a  dozen 
other  items  of  landed  costs  to  be  taken  into  consideration. 

In  every  tariff  there  are  hundreds  if  not  thousands  of 
schedules,  almost  invariably  on  an  entirely  different  basis  from 
our  own.  Indexes  are  neither  full  nor  dependable.  After 
hours  upon  hours  of  unsuccessful  search  one  is  inclined  to  take 
refuge  in  the  ''n.o.e."  category,  guess  that  one's  goods  will  be 
"not  otherwise  enumerated" — but  one  never  knows  whether 
he  will  be  right  in  his  guess. 

Tariffs  of  almost  all  other  countries  are  unlike  our  own  in 
substituting  specific  for  ad  valorem  duties,  usually  taxes  on  the 
basis  of  weight,  which  may  be  gross,  net  or  legal  weight.  Tare 
for  packages  is  often  established  by  law.  Often  an  "official 
valuation"  is  established,  i.e.,  the  law  will  declare  that  a  cer- 
tain article  is  worth  a  certain  price,  on  which  price  duties  will 
be  levied  no  matter  what  the  actual  invoice  says  about  it. 


CHAPTER  XIII 

MARINE  INSURANCE 

Why  Marine  Insurance  Is  Necessary — When  the  Duty  of  Effect- 
ing Insurance  Devolves  on  Manufacturers — The  Principles  In- 
volved in  Marine  Insurance — An  Explanation  of  "General 
Average"  and  ''Particular  Average'^ — Insurance  Policies  awd 
Certificates  Issued  Under  Them — Pecidiar  Phraseology  of  Pol- 
icies Explained — Insurance  Against  War  Bisk — How  Insur- 
ance Claims  Are  Collected. 

MARINE  insurance  is  perhaps  that  feature  of  business  re- 
lations with  foreign  countries  which  differs  most  strik- 
ingly and  radically  from  practices  usual  in  our  domestic 
trade.  We  do  not  often  insure  goods  shipped  by  rail  in  the 
United  States,  because  the  railway  companies  are  by  our  laws 
the  insurers  of  the  goods  they  transport.  They  are  responsible 
for  loss  or  damage  en  route.  Ocean  steamships,  on  the  contrary, 
are  specifically  exempted  by  the  laws  of  nearly  all  countries  from 
almost  every  form  of  liability  excepting  when  loss  or  damage 
arises  from  negligence,  fault  or  failure  in  proper  loading,  stow- 
age, custody,  care  or  proper  delivery  of  merchandise.  Prac- 
tically all  other  risks  have  to  be  assumed  by  the  shipper  or  his 
consignee  or  some  form  of  insurance  protection  secured. 

Since  shipments  are  always  insured  for  the  benefit  of  the  con- 
signee, since  he  pays  the  cost  of  insurance,  he  may  be  expected  to 
instruct  the  shipper  as  to  the  form  of  insurance  which  he  desires 
and  is  willing  to  pay  for.  Manufacturers  should  always  ask 
their  customers  for  instructions  in  this  regard  and  the  various 
kinds  of  insurance  protection  may  be  diplomatically  explained 
to  small  importers  not  accustomed  to  oversea  transactions,  while 
in  every  instance  e.i.f.  quotations  made  by  manufacturers  should 
specifically  define  the  kind  of  insurance  proposed  and  included 
in  the  e.i.f.  prices.     Shippers,  therefore,  must  themselves  un- 

432 


MARINE  INSURANCE  433 

derstand  clearly  both  the  general  subject  and  the  various  facili- 
ties which  are  available. 

WHEN  AND  HOW  TO  INSURE 

Every  manufacturer  or  other  shipper  of  goods  for  export 
must  invariably  cover  his  shipments  by  appropriate  insurance, 
or  make  certain  that  others  do  so.  When  goods  are  ordered  and 
shipped  by  an  export  commission  house,  the  latter  will  attend  to 
the  insurance  without  instructions  from  the  manufacturer. 
When  shipments  are  made  through  forwarding  agents  they  must 
be  told  how  and  for  how  much  to  insure — although  they  seldom 
fail  to  enquire  for  such  instructions.  Usually  in  the  case  of 
shipments  through  forwarding  agents  the  manufacturer  himself 
does  not  effect  the  insurance,  although  he  may  do  so  if  he 
chooses;  the  rule  is  that  the  forwarder  attends  to  it,  following 
the  authority  and  directions  of  the  manufacturer.  But  when  a 
manufacturer  does  his  own  shipping  then  he  alone  is  responsible 
for  this  very  important  matter  of  insurance  which  he  must  never 
overlook  or  forget. 

Lists  of  companies  which  issue  marine  policies  are  included  in 
the  Export  Trade  Directory.  Correspondence  direct  with  any 
of  them  will  result  in  suitable  arrangements.  It  should  be  noted 
that  one  agency  often  controls  or  issues  policies  for  a  number  of 
different  insurance  companies,  placing  risks  with  whichever 
company  circumstances  may  indicate.  Hence  correspondence 
should  preferably  be  addressed  to  agents  rather  than  to  special 
companies. 

The  Insurance  Broker. — A  shipper  may  effect  his  own  insur- 
ance directly  with  tlie  companies  which  he  prefers  or,  if  he 
chooses,  he  may  employ  a  professional  insurance  broker.  Ex- 
port commission  houses  and  other  large  and  regular  shippers  al- 
most always  employ  a  broker,  believing  that  the^^  are  thus  able 
to  secure  the  most  advantageous  rates  as  well  as  special  features 
of  protection.  These  brokers  are  paid  by  the  insurance  com- 
panies a  commission  on  the  premiums,  said  to  range  from  2V2 
to  5  per  cent.  The  familiarity  of  the  brokers  with  the  practices 
of  sundry  companies,  as  well  as  those  foreign  countries  where 
special  organizations  may  be  maintained  by  certain  companies, 
is  often  of  advantage  to  shippers  in  placing  their  risks. 


434  PRACTICAL  EXPORTING 

THE  PRINCIPLE  OF  MARINE  INSURANCE 

Fire  and  life  insurance  with  all  of  their  ramifications  are  ev- 
erywhere familiar.  Marine  insurance  is  far  older  than  these 
other  forms  but  because  hitherto  less  common  in  this  country  is 
seldom  understood.  It  is  indeed  a  complicated  subject  which 
can  only  be  reviewed  briefly  in  a  single  chapter.  j\lany  more  or 
less  elaborate  and  technical  treatises  are  available  to  the  student 
who  wishes  to  make  a  thorough  investigation. 

We  have  a  number  of  American  companies  insuring  marine 
risks  usually  in  connection  with  other  forms  of  insurance. 
They  have  active  competitors  in  the  shape  of  foreign  companies 
who  began  to  establish  themselves  in  this  country  in  the  '70 's, 
after  numerous  American  companies  had,  it  is  claimed,  been 
ruined  by  losses  of  American  vessels  during  the  Civil  War  and 
had  been  denied  by  Congress  any  share  in  the  $15,000,000  Ala- 
bama Claims  indemnity,  although  the  claims  of  these  American 
insurance  companies  had  been  used  by  the  United  States  Gov- 
ernment in  contending  with  Great  Britain  for  this  indemnity 
and  in  making  up  its  sum.  Favored  by  local  legislation,  espe- 
cially in  the  State  of  New  York,  English,  German  and  other 
European  even  Chinese  marine  insurance  companies,  have  com- 
peted with  American  companies  in  the  business  of  insuring 
American  cargoes. 

Antiquity  of  Marine  Insurance. — Levantine  traders  of  the 
Mediterranean  the  great  seat  of  ancient  commerce,  are  known 
to  have  evolved  certain  principles  of  marine  protection  which 
forms  a  part  of  our  system  of  to-day,  2,500  years  ago,  perhaps 
more.  The  old  Rliodian  laws,  parts  of  which  were  later  incor- 
porated in  the  Roman  law  made  in  times  when  ships  were  chiefly 
propelled  by  oars,  provided  that  when  in  case  of  danger  to  the 
ship  it  was  necessary  to  throw  cargo  overboard,  the  loss  involved, 
undertaken  for  the  benefit  of  all  concerned,  should  be  made  good 
by  pro  rata  contributions  from  all.  This,  as  we  shall  see,  has 
descended  to  our  own  day.  It  is  known,  too,  that  the  same  an- 
cient laws  protected  traders  from  other  losses  at  sea,  although 
the  exact  forms  have  not  been  recorded. 

The  Lombards  from  Italy,  the  richest  traders  in  Europe  in 
the  Middle  Ages,  are  believed  to  have  introduced  marine  insur- 


MARINE  INSURANCE  435 

ance  into  England  in  tiie  fifteenth  century.  The  earliest  known 
marine  insurance  policy  is  dated  1680.  In  the  early  days  of  the 
American  colonies  their  maritime  shipments  were  insured  in 
London,  but  insurance  offices  were  established  in  this  country 
as  early  as  1721,  in  those  days  carrying  on  the  business  in  the 
fashion  common  in  London,  that  is  through  underwriters. 

Insurance  "Underwriters." — "Lloyds"  is  to-day  synonymous 
with  insurance  the  world  over.  The  Corporation  of  Lloyds  as 
it  now  exists  in  London  grew  out  of  an  association  of  under- 
writers which  originated  from  the  practice  of  gentlemen  inter- 
ested in  marine  insurance  meeting  daily  at  a  popular  coffee  house 
established  in  London  by  Edward  Lloyd  as  early  as  1692.  To- 
day there  are  about  400  members  of  Lloyds  who  make  headquar- 
ters in  the  Royal  Exchange,  London.  They  carry  on  business 
in  very  much  the  same  fashion  as  they  did  two  hundred  years 
ago. 

Seldom  is  one  risk  assumed  by  one  man.  A  memorandum  is 
usually  submitted  to  various  members  of  Lloyds  by  an  English 
merchant  or  shipper,  giving  particulars  of  the  risk  which  he 
desires  covered.  Any  member  of  Lloyds  who  wishes  to  "take 
a  line"  on  the  proposed  risk  "initials  the  slip,"  signifying  that 
he  accepts  such  part  of  the  total  value  to  be  covered  as  he  may 
indicate.  If  the  risk  is  one  for  £1,000  it  will  probably  be  cov- 
ered by  anywhere  from  five  to  ten  individuals,  each  subscribing 
for  a  share  in  the  risk  of  from  £50  to  £200,  at  the  rate  of  pre- 
mium which  has  been  fixed  as  covering  the  whole  risk.  There- 
after, a  formal  policy  is  prepared  which  becomes  the  actual  con- 
tract of  insurance  and  is  signed,  or  "underwritten,"  by  the  in- 
dividuals who  have  agreed  to  accept  proportionate  shares  of 
the  risk.  The  effecting  of  marine  insurance  through  "under- 
writers" long  ago  went  out  of  fashion  in  this  country  and  is  now 
exclusively  in  the  hands  of  large  companies  which  always  as- 
sume the  entire  risk  in  each  instance  even  though  they  may 
thereafter  re-insure  portions  with  other  companies.  It  is  to  be 
noted  that  individual  underwriters  do  not  by  any  means  control 
the  entire  marine  insurance  business  in  England.  Large  and  im- 
portant companies  exist  there  also. 

Liabilities  of  Ocean  Carriers. — In  our  consideration  of  the 
nature  and  form  of  bills  of  lading,  we  have  remarked  the  limita- 


436  PRACTICAL  EXPORTING 

tions  to  the  liability  of  ocean  carriers  secured  through  the  Harter 
Act.  It  is  here  to  be  noted  in  addition,  that  if  a  shipowner  ex- 
ercises due  diligence  to  make  his  vessel  in  all  respects  seaworthy 
and  properly  manned,  equipped  and  supj)lied,  neither  he  nor  the 
charterers  shall  be  held  responsible  for  damage  or  loss  resulting 
from  faults  or  errors  in  navigation  or  in  the  management  of  the 
vessel,  nor  shall  they  be  held  liable  for  losses  arising  from  dangers 
of  the  sea,  acts  of  God,  or  public  enemies,  or  the  inherent  defect, 
quality  or  vice  of  the  thing  carried,  or  from  insufficiency  of 
package,  or  seizure  under  legal  process,  or  for  loss  resulting  from 
any  act  or  omission  of  the  slii^jper  or  owner  of  the  goods,  or 
from  saving  or  attempting  to  save  life  or  property  at  sea,  or 
from  any  deviation  in  rendering  such  service.  It  is  obvious, 
therefore,  that  the  responsibility  for  a  good  many  kinds  of  losses 
which  may  be  incurred  can  with  difficulty  be  brought  home  to 
the  carrier.  The  shipper's  protection  against  any  other  losses 
must  be  secured  through  marine  insurance. 

Protection  Under  Simple  Marine  Policy. — Marine  insurance 
is  not  primarily  intended  to  cover  any  other  than  strictly  marine 
risks  properly  included  under  the  term  "perils  of  the  sea." 
Loss  or  damage  must  be  directly  traceable  to  perils  of  the  sea. 
Loss  from  other  causes,  deterioration  of  perishable  goods,  break- 
age, leakage  and  robbery,  are  not  covered  by  the  marine  policy 
except  under  special  contract  and  in  consideration  of  special 
premiums. 

To  the  uninitiated  the  term  "perils  of  the  sea"  might  convey 
the  idea  that  in  obtaining  a  policy  of  marine  insurance  he  will 
be  indeimiified  against  every  damage  which  his  goods  might 
suffer  in  course  of  their  voyage.  The  definition  of  this  terra  in  a 
judgment  of  Lord  Herschell  in  1887,"  is  accepted  as  the  best  ex- 
tant. "I  think  it  clear  that  the  term  'perils  of  the  sea'  does 
not  cover  every  accident  or  casualty  which  may  happen  to  the 
subject  matter  of  the  insurance  'on'  the  sea.  It  must  be  a  peril 
'of  the  sea.  Again,  it  is  well  settled,  that  it  is  not  every  loss  or 
damage  of  which  the  sea  is  the  immediate  cause  that  is  covered 
by  these  words.  They  do  not  protect,  for  example,  against  that 
natural  and  inevitable  action,  which  results  in  what  may  be  de- 
scribed as  wear  and  tear.  There  must  be  some  casualty,  some- 
thing which  could  not  be  foreseen  as  one  of  the  necessary  iuci- 


MARINE  INSURANCE  437 

dents  of  the  adventure.  The  purpose  of  the  policy  is  to  secure 
an  indemnity  against  accidents  which  may  happen,  not  against 
events  which  must  happen."     - 

Risks  not  Covered  by  Simple  Policies.— One  of  the  contin- 
gencies against  which  an  ordinary  policy  of  marine  insurance 
does  not  protect  is  thus  described  by  William  C.  Downs  in  an 
article  in  the  Amejncan  Exporter: 

"An  importer  is  simply  causing  himself  unnecessary  trouble 
and  expense  in  making  claim  for  some  losses  unless  his  policy 
expressly  covers  them.  He  should  carefully  study  the  nature  of 
his  imports  and  determine  whether  he  can  run  the  risk  of  losses 
from  these  causes  or  whether  it  is  better  business  to  pay  the 
exti-a  premium  to  be  insured  against  them.  Many  a  merchant 
in  certain  countries  finds  upon  examining  eases  received  in  ap- 
parent good  condition  that  a  portion  of  their  contents  has  been 
abstracted  by  expert  pilferers.  He  naturally  makes  claim  against 
the  steamship  line  or  carrier,  and  is  probably  met  by  a  denial  of 
responsibility  on  the  ground  that  the  bill  of  lading  merely  calls 
for  the  delivery  of  so  many  packages  'said  to  contain'  such  and 
such  merchandise,  and  that  they  have  no  means  of  knowing  that 
the  packages  ever  contained  the  goods  said  to  have  been  stolen. 
His  only  remaining  recours'e  is  the  insurance  company,  but  un- 
less his  policy  distinctly  states  that  it  includes  the  risk  of  theft 
and  pilfering,  he  may  as  well  pocket  his  loss  at  once  and  save 
himself  further  disappointment." 

Loss  or  damage  by  fire  must  be  covered  by  a  special  clause  in 
the  insurance  policy.  Usually  such  a  special  clause  covers 
against  risk  for  specific  periods  while  lying  on  the  quay  or  in  the 
custom  house  at  port  of  destination.  Sometimes  such  risk  may 
be  still  further  extended. 

To  exclude  apparently  inevitable  loss  which  certain  goods  al- 
ways seem  to  sufi^er  at  the  end  of  a  voyage  and  to  prevent  many 
vexatious,  petty  claims,  insurance  policies  always  provide  that 
damage  in  regard  to  such  articles  shall  not  be  paid  unless  it 
amounts  to  a  certain  percentage  of  the  value  of  such  articles. 
This  is  called  the  "franchise,"  and  this  form  of  insurance  is  re- 
ferred to  as  "free  of  particular  average."  It  is  a  featiire  of 
almost  all  ordinary  policies  of  marine  insurance  but  may  be  su- 
jjerseded  by  special  contracts  covering  "all  risks,"  or,  as  it  is 


438  PRACTICAL  EXPORTING 

sometimes  termed,  ''with  average."  These  expressions  we  shall 
shortly  examine  more  particularly. 

Special  Contract  Protection. — The  scope  of  marine  insurance 
has  been  so  extended  nowadays  that  it  is  possible  to  include  in  a 
policy  special  clauses  covering  almost  any  sort  of  protection  de- 
sired— all,  of  course,  by  agreement  with  underwriters  and  on  pay- 
ment of  agreed  upon  premiums.^  Eiders  affixed  to  policies  in 
printed  and  gummed  form,  or  added  by  rubber  stamps,  are  num- 
bered by  the  hundred.  It  is  possible  for  a  manufacturer  to  in- 
sure his  goods  while  en  route  from  inland  factory  through  to  in- 
land point  of  foreign  destination  by  rail,  steamer  and  any  other 
necessary  form  of  transportation;  to  insure  them  against  fire, 
theft,  leakage,  breakage,  even  against  earthquakes  and  dangers 
of  mule-back  transportation  in  Latin  American  countries. 

Wherever  possible,  arrangements  should  be  made  with  the  in- 
surance company  to  cover  all  risks  from  the  moment  the  goods 
leave  the  point  of  origin,  the  factory,  until  they  are  placed  in  the 
warehouse  of  the  foreign  customer,  including  a  good  margin,  say 
thirty  days  whilst  the  goods  are  awaiting  clearance  in  a  foreign 
custom  house.  This  latter  point  must  always  be  discussed  di- 
rectly with  the  customer,  for  in  some  instances  customers  object 
to  pay  a  higher  insurance  than  the  rate  for  sea  risks  only,  al- 
though their  objections  are  based  on  a  wrong  conception  of  the 
risks  to  be  covered  and  the  making  of  a  single  claim  is  usually 
enough  to  convince  a  customer  of  the  advisability  of  insuring 
right  up  to  delivery  to  his  warehouse. 

Importers  Should  Dictate  Form  of  Insurance. — All  insurance 
risks  are  proper  subjects  for  discussion  between  importer  and 
shipper,  between  whom  a  thoroughly  good  mutual  understanding 
should  be  arrived  at,  but  it  is  the  importer  alone  who  can  indi- 
cate just  the  form  of  insurance  which  he  desires.  Large  im- 
porters in  the  better  organized  markets  of  the  world  are  thor- 
oughly well  posted  as  to  insurance  conditions,  but  many  will  be 
found  in  less  developed  markets,  particularly  throughout  Latin 
America,  who  really  know  very  little  about  the  various  kinds 
of  protection  available.  When  suspicion  develops  that  this 
may  be  the  case  the  American  shipper  may  very  well  undar- 
take  to  point  out  some  of  the  features  of  possible  protection,  thus 

1  For  some  examples,  see  Form  22,  both  face  and  endorsement. 


MARINE  INSURANCE  439 

seeking  more  intelligent  direction  from  his  customer  who  will  be 
charged  with  the  premiums  required. 

War  risk  insurance  is  properly  no  part  of  marine  insurance 
protection.  The  word  insurance  as  used  between  buj^er  and 
seller  in  times  of  peace  is  to  be  interpreted  as  usual  under  such 
conditions,  and  cannot  be  supposed  to  include  war  risk. 

AVERAGE— GENERAL  AND  PARTICULAR 

Inexperienced  shippers  are  sure  to  be  puzzled  by  the  word 
"average"  as  they  encounter  it  in  a  study  of  marine  insurance. 
Average  is  not  used  in  connection  with  marine  insurance  in  its 
usual  sense,  in  fact,  it  is  another  word  altogether,  derived  from 
quite  another  source,  or  at  least  with  a  very  different  applied  sig- 
nification. Average  in  marine  insurance  seems  to  be  immedi- 
ately derived  from  those  words  in  the  Romance  languages  of 
which  the  French  acarie  is  perhaps  the  most  familiar  example, 
meaning  damage. 

Definitions  of  "Average." — One  of  the  good  definitions  of 
the  two  sorts  of  average  noticeable  in  marine  insurance  policies, 
namely,  "Particular  Average"  and  "General  Average,"  is  that 
given  by  the  president  of  one  of  the  American  marine  insurance 
companies.  "Where  there  is  partial  loss  and  the  insured  cannot 
or  does  not  elect  to  abandon  and  receive  the  entire  indemnity, 
it  becomes  necessary  to  ascertain  the  amount  for  which  the  in- 
surer is  liable.  Such  partial  losses  are  known  by  the  name  of 
average.  ...  It  is  frequently  necessary  to  sacrifice  some  part  of 
the  ship  or  cargo  in  order  to  save  the  rest.  It  is  obviously  un- 
just to  have  the  entire  burden  of  loss  under  such  circumstances 
fall  upon  the  party  whose  property  is  thus  voluntarily  destroyed 
or  injured.  Maritime  law,  therefore,  prescribes  the  way  in 
which  such  losses  shall  be  apportioned  or  'averaged'  among  all 
the  interests  at  stake.  The  term  'average'  was  later  extended  to 
include  losses  of  all  kinds.  To  distinguish  those  losses  which  are 
of  such  a  nature  that  they  ought  to  be  apportioned  among  all  the 
parties  from  those  which  ought  to  be  borne  entirely  by  the  party 
whose  property  is  damaged,  the  former  kind  of  loss  is  called  'gen- 
eral average,'  the  latter  'particular  average.'  " 

According  to  a  prominent  English  authority.  General  Average 
is  defined  as  "all  loss  arising  out  of  a  voluntary  sacrifice  made  of 


440  PRACTICAL  EXPORTING 

any  part  of  tlie  ship  or  cargo  to  prevent  loss  of  the  whole  or  to 
rescue  the  whole  adventure  from  unusual  peril."  If  A's  goods 
are  damaged  or  destroyed  by  water  pumped  into  a  ship  to  save 
the  ship  and  the  whole  cargo  from  destruction  it  is  not  equable 
that  A  should  suffer  the  whole  loss.  It  is  to  be  apportioned. 
Particular  Average  is  defined  as  "damage  or  partial  damage  to 
the  ship  or  to  the  particular  subject  to  which  the  policy  relates." 

General  Average. — An  exporter  of  slight  experience  is  likely 
to  be  surprised  and  resentful  when  he  is  told  that  he  has  not 
only  lost  his  goods  but  must  also  pay  for  the  privilege  of  losing 
them.  Yet  the  principle  involved  is  well  recognized  and  logical, 
and  has  already  been  referred  to  in  our  notice  of  the  antiquity 
of  marine  insurance.  Even  the  ancients  agreed  that  when  in  a 
storm  or  on  account  of  an  accident  it  was  necessary  to  sacrifice 
part  of  a  cargo  for  the  safety  of  all  the  cargo  and  the  ship  itself, 
all  the  parties  at  interest,  the  owners  of  the  cargo  saved  or  not 
saved  and  the  owners  of  the  ship,  should  contribute  to  the  sacri- 
fices made  for  the  safety  of  all.  If  a  shipper  of  goods,  either  on 
his  own  account  or  as  agent  for  his  foreign  buyers,  has  not 
protected  those  goods  by  a  suitable  policy  of  marine  insurance 
he  must  suffer  losses  described  as  "general  average"  losses. 
General  average  exists  quite  independent  of  insurance.  The  lia- 
bility for  a  contribution  to  general  average  is  a  common  law 
liability. 

Not  only  must  those  interests  which  have  sustained  loss  or 
damage  by  a  general  average  sacrifice  contribute  to  the  costs 
incurred  in  making  good  such  a  loss  or  damage,  but  the  amount 
itself  which  has  been  made  good  must  also  pay  its  proper  pro- 
portion toward  the  general  average.  The  owner  of  property 
which  has  been  sacrificed  must  not  be  in  a  better  position  than 
those  whose  property  has  been  saved.. 

Therefore,  whether  or  not  a  shipper  has  received  instructions 
from  his  foreign  customers  to  insure  the  goods,  he  must,  none 
the  less,  insure  them  for  his  own  protection,  although  the  ship- 
ment is  regarded  as  the  customer's  property,  and  no  matter 
what  the  legal  aspect  of  his  customer's  responsibility  may  be. 
A  consignee  might  decline  to  acknowledge  any  interest  in  the 
shipment.  When  a  general  average  loss  has  been  incurred  the 
shipper  or  the  known  owner  of  the  goods  will  be  notified  of  an 


PRICA, 


BROWllE^    GREEl 


red  for  loss  of  or 
Id  on  acceptance 
pmpany  shall  not 

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pignment  or  sub- 

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their  account  or  contrj 
»  any  known  or  reported  : 
.ons  to  insure,  excluding 
t  to  insure  or  which  are 
in  force  at  this  date,  i 
£6  regards  all  shipments 
er  date  hereof, 
dise.  including  prepaid  i 
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:  SHIPMEl^TS.  unless  other 
the  assured' 8  option,  as 
in  at  time  of  declaration 
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SHIPMENTS  are  insured:  Fre 
,  stranding,  burning  or  col 
washing  overboard. 

;  is  hereby  understood  and  a 
,  shall  be  insured  at  "With 
3rage  and/ or  robbery,  xinlese 

t  is  hereby  tmderstood  and  8 
declaration^  shipments  of  ai 


Insurance  Company  of  North  America, 


PHILADELPHIA. 


ARGO. 


BEOWHE,    GREEKE  &  WHYTE 


O.V  ACCOVKT  OF 


whom  it  may  ccncerii 


;  of  loss  to  be  paid  in  funds  current  in  the  United  States,  I 
make  Insurance,  and  cause  themselves 


endorserf.ent  hereof 


As  per  endorsement  hereof         

to  be  insured,  losi  or  not  lost,  at  and  from 


•^  i!^\  *'°^^'*"^  «^*'' 


m 


I 


vessel,  or  by  whatever  other  r 


fit: 


•zl-  ft 


upon  all  kinds  of  lawful  goods  and  merchandises,  laden  or  to  be  laden  on  board 

or  whoevei"  else  shall  go  as  master  in  the  said 
i  the  said  vessel,  or  the  master  thereof,  is  or  shall  be  named  or  called. 
P         IBrgUlltiltg  the  adventure  upon  the  said  goods  and  merchandises,  from  and  inimediatcly  following  the  loading  thereof  on  board  ot 
1   the  said  vessel,  as  aforesaid,  and  so  shall  continue  and  endure  until  the  said  goods  and  merchandises  shall  be  safely  landed  as  aforesaid. 
AND  it  shall  and  may  be  lawful  for  the  said  vessel,  in  her  voyage,  to  proceed  and  sail  to,  touch  and  stay  at,  any  ports  or  i:laccs.  if  there- 
unto obliged  by  stress  of  weather,  or  other  unavoidable  accident,  without  prejudice  to  this  insurance.    The  said  goods  and  merchandises, 
hereby  insured,  are  valued  {premium  included)  at      Not  more  than  $75j000«    by  any  one  vessel 

aimirlruig  the  adventures  and  perils  which  the  said  INSURANCE  COMPANY  OF  NORTH  AMERICA  is  contented  to  bear, 
and  takes  upon  itself  in  this  voyage,  they  are  of  the  seas,  fires,  jetlistms.  barratry  of  the  master  and  tjmriners,  unless  the  assured  on  cargo  be 
in  part  owner  of  the  vessel,  and  all  other  perils,  losses  and  misfortunes  (iUicit  or  contraband  trade  excepted  in  all  cases),  that  have  or 
shall  come  to  the  hurt,  detriment  or  damage  of  the  said  goods  and  merchandises,  or  any  part  thereof.  AND  in  case  of  any  loss  or  mis- 
.  fortune,  it  shall  be  lawful  and  necessary  to  and  for  the  assured,  his  or  their  factors,  servants  and  assigns,  to  sue,  labor  and  travel  for,  in 
and  about  the  defence,  safeguard  and  recovery  of  the  said  goods  and  merchandises,  or  any  part  thereof,  without  prejudice  to  this  insur- 
ance; nor  shall  the  acts  of  the  assured  or  insurers,  in  recovering,  saving  and  preserving  the  proper^  insured,  in  case  of  disaster,  be 
considered  a  waiver  or  an  acceptance  of  abandonment;  to  the  charges  whereof,  the  said  Insurance  Company  will  contribute  according 
to  the  rate  and  quantity  of  the  sum  herein  insured:  having  been  paid  the  consideration  for  this  insurance  by  the  assured,  or  his  or  their 
assigns,  at  and  after  the  rate  of       As   per   endorseir.ent  hereof 

Anil  in  case  of  loss,  such  loss  to  be  paid  in  thirty  days  after  proof  of  loss,  proof  of  interest,  and  adjustment  exhibited  to  the  insur- 
ers (the  Smount  of  th*  Note  given  for  the  premium,  if  unpaid,  and  all  sums  due  to  the  Company  from  the  assured  w^hen  such  loss  becomes 
due  being  first  deducted,  and  all  sums  coming  due  being  first  paid  or  secured  to  the  satisfaction  of  the  insurers),  but  no  partial  loss  or 
'  particular  average  shall  in  any  case  be  paid,  miless  amounting  to  ^re  per  cent.  PROVIDED  ALWAYS,  and  it  is  hereby  further  agreed, 
that  if  the  said  assured  shall  have  made  anv  other  insumnce  upon  the  property  aforesaid,  prior  in  dav  of  date  to  this  Policy,  then  the  said 
INSURANCE  COMPANY  OF  NORTH  AMERICA  shall  be  answerable  only  for  so  much  as  the  amount  of  such  prior  insurance  may 
be  deficient  towards  fully  covering  the  propertj-  hereby  insured.  And  the  said  INSURANCE  COMPANY  OF  NORTH  AMERICA 
shall  return  the  premium  upon  so  much  of  the  sum  by  them  insured  as  they  shall  be  by  such  prior  insurance  exonerated  from.  And  in 
case  of  any  insurance  upon  the  said  property  subsequent  in  day  of  date  to  this  pohcy,  the  said  INSURANCE  COMPANY  OF  NORTH 
AMERICA  shall  nevertheless  be  answerable  for  the  full  c.\tent  of  the  sum  by  them  subscribed  hereto  without  right  to  claim  contribution 
from  such  subsequent  insurers.  And  shall  accordingly  be  entitled  to  retain  the  premium  by  them  received  in  the  same  manner  as  if  no 
such  subsequent  insurance  had  been  made.  Other  insurance  upon  the  property  aforesaid,  of  date  the  same  day  as  this  policy,  shall  be 
deemed  simultaneous  herewith;  and  the  said  INSURANCE  COMPANY  OF  NORTH  AMERICA  shall  not  be  hable  for  more  than  a 
ratable  contribution  in  the  proportion  of  the  sum  by  them  insured  to  the  aggregate  of  such  simultaneous  insurance.  IT  IS  ALSO 
AGREED,  that  the  subject  matter  of  this  insurance  be  warranted  by  the  assured  free  from  loss  or  damage  arising  from  riot,  civil  com- 
motion, capture,  seizure,  or  detention  or  from  any  attempt  thereat,  or  the  consequences  thereof,  or  the  direct  or  remote  coiisequences  of 
anv  hostilities,  arising  from  the  acts  of  any  government,  people,  or  persons  whatsoever  (ordinary  piracy  excepted),  whether  on  account 
of  any  illicit  or  prohibited  trade,  or  any  trade  in  articles  contraband  of  war,  or  the  violation  of  any  port  regulation,  or  otherwise.  Also 
free  from  loss  or  damage  resulting  from  measures  or  operations  incident  to  war,  whether  before  or  after  the  declaration  thereof. 

In  the  event  of  risk  of  war  being  assumed  by  endorsement  under  this  policy,  the  assured  warrant  not  to  abandon  in  case  of  capture, 
seizure  or  detention,  until  after  the  condemnation  of  the  property  insured;  nor  imtil  ninety  days  after  notice  of  said  condemnation  is 
given  to  this  Company.  Also  warranted  not  to  abandon  in  case  of  blockade,  and  free  from  any  expense  in  consequence  of  detention  or 
Blockade;  but  in  the  event  of  blockade,  to  be  at  liberty  to  proceed  to  an  open  port  and  there  end  the  voyage, 

mrmontitlUun.  it  is  also  agreed,  that  bar,  bundle,  rod,  hoop  and  sheet  iron,  wire  of  all  kinds,  tin  plates,  steel,  madder,  sumac, 
brooms,  wicker-ware  and  willow  (manufactured  or  otherwise),  straw  goods,  salt,  gi-ain  ot  all  kinds,  rice,  tobacco,  Indian  meal,  fruits 
(whether  preserved  or  otherwise),  cheese,  dry  fish,  hay,  vegetables  and  roots,  paper,  rags,  hempen  yam,  bags,  cotton  bagging,  and  other 
articles  used  for  bags  or  bagging,  pleasure  carriages,  household  furniture,  sldns  and  hides,  musical  instruments,  looking-glasses,  and  all 
other  articles  that  are  perishable  in  their  own  nature,  arc  warranted  by  the  assured  free  from  average,  unless  general;  hemp,  tobacco 
stems,  matting  and  cassia,  except  in  boxes,  free  from  average  under  twenty  per  cent.,  unless  general;  and  sugar,  flax,  flax-seed  and  bread, 
I  are  warranted  by  the  assured  free  from  average  under  seten  per  cent.,  unless  general:  and  coffee,  in  bags  or  oulk.  pepper,  in  bags  or  bulk, 
I  free  from  average  under  len  per  cent.,  unless  general,  Profits  warranted  free  from  claim  for  general  average,  but  subject  to  the  same  per 
I  centum  of  partial  loss  as  if  the  insurance  were  on  goods.  In  case  a  total  loss  of  profits  be  claimed,  the  Underwriters  to  be  entitled  to  a 
.  credit  of  the  same  per  centum  of  salvage  as  if  the  insurance  were  on  goods,  and  in  case  of  contribution  in  General  Average  for  any  por- 
J  tion  of  the  goods  at  the  customary  sound  value,  this  Company  to  be  free  from  claim  for  loss  on  such  portion.  Not  liable  for  loss  arising 
'.  from  wet.  breakage,  leakage,  or  exposure  of  goods  shipped  on  deck. 

Warranted  by  the  assured  free  from  damage  or  injurj'  from  dampness,  change  of  flavor,  or  being  spotted,  discolored,  musty  or 
mouldy,  unless  caused  by  actual  contact  of  sea  water  with  the  articles  damaged,  occasioned  by  sea  perils.  In  case  of  partial  loss  by  sea 
damage  to  dry  goods,  cutlery,  or  other  hardware,  the  loss  shall  be  ascertained  by  a  separation  and  sale  of  the  portion  only  of  the  contents 
of  the  packages  so  damaged,  and  not  otherwise;  and  the  same  practice  shall  obtain  as  to  all  other  merchandise  as  far  as  practicable.  Not 
liable  for  leakage  on  molasses  or  other  liquids,  unless  occasioned  by  stranding  or  collision  with  another  vessel. 

Warranted  by  the  assured  that  this  insurance  shall  not  enure  directly  or  indirectly  to  the  benefit  of  the  carrier  or  other  bailee,  by 
stipulation  in  bill  of  lading  or  otherwise,  and  any  breach  of  this  warranty,  and  any  act  or  agreement  by  the  assured,  prior  or  subsequent 
hereto,  whereby  any  carrier  or  party  liable  for  or  on  account  of  loss  of  or  damage  to  any  property  insured  hereunder,  is  given  the  benefit 
of  any  ^insurance  effected  thereon,  shall  render  this  policy  of  insurance  null  and  void. 


m 


b 


of  abandonment  or  payment  of  a  loss  by  this  Company,  liave  enured  to  its  benefit,  but  for  such  agreement  or  act,  this  Company  shall  not 
be  bound  to  pay  any  loss,  but  its  right  to  retain  or  recover  the  premium  shall  not  be  affected. 

Warranted  by  the  assured,  that  the  assignment  of  this  policy  or  of  any  insurable  interest  therein,  as  also  that  the  subrogation  of 
any  right  thereunder  to  any  party,  without  the  consent  of  this  Company,  shall  render  the  insurance  aflected  by  such  assignment  or  sub- 
rogation, void. 

3ln  BmtfM   fflt(prfnf.  the  President  or  Vice-President  of  the  said  INSURANCE  COMPANY  OF  NORTH  AMEfUCA  hath 
hereimto  subscribed  his  name,  and  this  Policj'  is  made  and  accepted  upon  the  above  express  condition,  the  thirteenth 

day  of       August  A.  D.  one  thousand  nine  hundred  and 


I 


^  BROWNE.  GREENE  &     WilYTC. 

§  <y  i  .5  o         For  account  of  whom  it  iray  concern. 
OSS'""  Lci8%,  if  any,  payable  to  them  or  order. 

■(u  0)  it.  *.  m  K        To  cover  all  Bhlpments,  their  own  property  or  that  of  others  made  by  them 

ino"^^  or  by  others  for  their  account  or  control,  or  which  prior  to  inception  ci  the 

s   o  ^-^  risk  or  prior  to  any  knovm  or  reported  loes  or  accident,  they  have  agreed  or  re- 

^oTmooS  oeived  instniotionB  to  insure,  excluding,  however,  all  ehipmenta  which  they  have 

SiSo'^S  instructions  not  to  insure  or  which  are  covered  under  open  policies  with  this  or 

SSocS'Stl  other  comnanies  in  force  at  this  date,  unless  cancelled  or  expired. 
tiaio     ^^o  To  attach  as  regards  all  shlpinents  by  steamers  sailing,  or  scheduled  to 

a>  .-doo^  sail,  on  or  after  date  hereof. 
5  2  S  <p  S^        O'^  Merchandise,  including  prepaid  and/or  guaranteed  freight  and/or  charges, 

CD  o  u  under  and/or  on  deck. 
>  S  a'o  a  a        nUDER  DECK  SHIPMENTS,  unleee  otherwise  specified  or  unless  otherwise  de- 
rtxa^^njo        Glared  at  the  aesured'a  option,  as  provided  within,  or  unless  otherwise 

^^<u4^^^alQ        agreed  upon  at  time  of  declaration,  are  insured  f.p.a.e.c.  as  follows: 

oooJBoo  E  •       "Free  of  particular  average  unless  the  vessel,  lighter  or  craft  or  the 

ouS  S  S  S        interest  insured  be  stranded,  sunk,  burned,  on  fire  or  in  collision  or 

o.q5<u"o.o  5  S       in  contact  with  ice,  in  which  latter  case  the  contact  to  be  of  euch  a 

'"■fSooiB  "  =        nature  as  may  reasonably  be  supposed  to  have  caused  or  led  to  the  dam- 

S  a  o*''S  u  °  te  "S      ^S^   claimed;  or  unless  caused  by  forced  discharge  in  a  port  of  distreee 

■p  -f  "  d  &J  S      also  to  pay  landing,  warehousing,  forwarding  and/or  special  charges,  if 

0)3  ma  So  S  =  .i      incurred,  also  partial  loss  arising  from  transshipment." 

=  «gg  ■E°—      Cry  Goods.  Hardware.  Machinery  Canned  Goods.  Leather,  Boots  a^d  shoes 

'v>  >^  K ^  .H  =  'S  »      and  other  approved  general  merchandise  are  insured:  Free  of  particiilar 

Qjcoo^o  "o  "  S.     average  unless  amounting  to  3'j,  each  case  or  shipping  package  sepa- 

^"g>  -^  -i ""  "      rately  insured. 

p.-t'woj3  M^—      It  is  also  understood  and  agreed  that  In  all  cases  where  goods  have 

o^O'o"'*  ;|  x  S      been  insured  at  other  than  f.p.a.e.c.  conditions  this  company  agrees 

<w  "  ''>.dc  -i  S  £      ^°   P*y<  without  regard  to  the  particular  average  franchise,  any  loss 

'M'SrH  0)  —is  which  would  be  recoverable  under  the  f.p.a.e.c.  conditions  as  provided 

S°>.Srto  - '"  within. 

oouooo        OH  DECK  SHIPMEHTS  are  insured:  Free  of  particular  average  unless  caused  by 

0)  m  o    o        sinking,  stranding,  burning  or  collision  but  to  cover  the  risk  of  jettison 

ij  o,  tl  tJ  a '^        and/or  washing  overboard. 

>.'d  0  01°  It  is  hereby  understood  and  agreed  that  all  shlpnents  of  Shoes,  Boots 

o  c  -d  d-x  and  Sandals,  shall  be  insured  at  "With  Average"  conditions,  including  the  risk  of 

^3)^  OH  .2  theft,  pilferage  and/or  robbery,  unless  otherwise  stated  on  the  declaration. 

o  Ma>ci  M  It  is  hereby  understood  and  agreed  that  unless  otherwise  applied  for 

.3^  "54^5    "•*  ti^e  of  declaration,  shipcients  of  automobiles  shall  be  insured  at  the  oonditioas 
.a  a  0)  m-a   • 

>.5d-o5o  "This  insurance  attaches  f  rom^  the  time  the  goods  are 

"■^gMaJ^  shipped  from  the  office  or  warehouse  of  the  assured  and/or 

■»j«3o.Hg  from  the  time  of  delivery  to  their  packers  for  export,  until 

o)s.i>.o)  ;^  delivered  to  the  consignees  at  final  destination,  and  covers 

""em  Sal  against  total  loss,  general  average  and  salvage  charges  and 

o.aoQ.Q.S  damage  and/or  breakage  to  the  goods  themselves  sustained 

during  the  continuance  of  this  insurance  however  arising,  but 
the  assurers  not  to  pay  for  any  claim  unless  amounting  to 
Twenty  Five  ($35)  Dollars,  each  automobile  being  separately 
insured." 

The  rate  of  insurance  for  shipments  of  automobiles  insured  at  the  above 
conditions,  from  New  York  via  London  to  Hew  Zealand,  by  owned  steamers  of  the 
Atlantic  Transport  Line  and  connections,  will  be----------  3/4^  Net. 

It  is  hereby  understood  and  agreed  that  the  rates  of  premium  on  ship- 
ments of  merchandise  as  provided  within  under  deck  are  fixed  as  follows: 


From  places  in  the  United  States  and/or  Canada, by  railroad  -  ' 

To  New  York  and  at  and  thence  to  ports  and  places  in 
Australia,  Tasmania,  Hew  Zealand  - 

Via  ports  in  the  United  Kingdom  and  the  Continent  of 
Europe,  B/H  - 

By  Class  "A"  Lines -..-_-_     5o^«;     60#^  Net 

Via  Cape  of  Good  Hope  or  Suez  - 

Dy  approved  steamers  --------     650^     75^55   » 

Via  ports  on  the  Pacific  Coast  of  North  America  - 

By  approved  steamers  of  regular  lines 35#^    45^55   " 

For  theft  and/or  pilferage,  add  -----  i/g^ 

Rate 
.e.c 

Other  risks  held  covered  at  rates  to  be  agreed  at  time  of  endorsement 


Rates  on  shipments  of  merchandise  "on  deck"  three  times  the  under 
deck  f.p.a.e.c.  rates. 


(U        0)  3 


So     of  risk. 

'^  a,      .    Valued,  premiuni  included,  at  invoice  cost,  including  prepaid  freight  and/or 

o  "     charges  and  10^  added,  unless  otherwise  declared  prior  to  shipment  or  prior  to 

^     known  or  reported  loss  or  accident,  and  then  at  amount  insured;  it  being  however, 
Q^     understood  and  agreed  that  in  case  of  loss  prior  to  declaration,  the  assured 
rt  »     Shall  be  entitled  to  declare  and  recover  on  whatever  basis  they  have  written  m- 
J3P,,;    etructions.  Issued  prior  to  known  loss, to  insure  or  have  made  it  a  practice  to 
^^jH    insured  for  account  of  their  respective  clients. 

Per  steamer  and/or  steamers  and  connecting  conveyances.  United 

To  he  insured,  lost  or  not  lost,  at  and  from  ports  and  places  in  the  a 
States  and/or  Canada  to  ports  and  places  in  the  World  and  vice  versa,  direct  or 
via  port  or  ports  including  risk  of  transshlpiaant  by  land  and/or  water. 


TE  &  WHYTE. 


rder. 

property  or  that  of  others  made  by  them 
:>!,   or  which  prior  to  inception  of  the 
Loss  or  accident^j  they  have  agreed  or  re- 
I,   however^  all  shipments  which  they  have 

covered  under  open  policies  with  this  or 
inless  cancelled  or  expired. 

by  steamers  sailing,  or  scheduled  to 

ind/or  gixaranteed  freight  and/ or  charges, 

.vise  specified  or  imless  otherwise  de- 
provided  within,  or  unless  otherwise 
,  are  insured  fop«a,e«c,  as  follows^ 
Qless  the  vessel,  lighter  or  craft  or  the 
,  sunk,  burned,  on  fire  or  in  collision  or 
ii  latter  case  xhe  contact  to  be  of  such  a 
supposed  to  have  caused  or  led  to  the  da»f- 
d  by  forced  discharge  in   a  port  of  distress 
sing,  forwarding  and/ or  special  charges,  if 
arising  from  transshipment," 

IX^  C&ffl eA  g.QpA^jj,  .^ffl'^^^f,^  Boots  aM  8hoe_s_ 

ircHandiie''^e"  inenlred:  Free'  of  particular 
3^0^  each"  case  or  shipping  package  sepa- 

reed  that  in  all  cases  where  goods  have 
•p.a.e.c.  conditions  this  company  agrees 
e  particular  average  franohiise,  any  loss 
nder  the  f«p.a.©oC.  conditions  as  provided 

e  of  particular  average  unless  caused  by 
lision  but  to  cover  the  risk  of  jettison 

.greed  that  all  shipments  of  Shoes,  Boots 
Average"  conditions,  including  the  risk  of 
1  otherwise  stated  on  the  declaration. 

igreed  that  \inles8  otherwise  applied  for 
itomobiles  shall  be  insured  at  the  conditioner  / 


MARINE  INSURANCE  441 

assessment  to  meet  general  average  costs  and  a  bond  will  be 
reciuired  of  liiui  to  cover  ultimate  contributions.  If  he  is  pro- 
tected by  a  marine  insurance  policy  he  has  only  to  turn  such 
notification  over  to  his  insurance  underwriters  and  they  will  take 
care  of  the  matter  for  him. 

What  Are  General  Average  Losses? — Losses  which  occasion 
a  demand  for  a  general  average  contribution  may  be  either  due 
to  sacrifice  of  property  or  to  expenditure.  In  either  case  they 
must  be  voluntary,  as  distinguished  from  accidental,  and  in- 
curred with  a  view  to  the  general  safety' ;  extraordinary,  that  is 
not  forming  part  of  ordinary  expenses  necessarily  incurred,  and 
they  must  be  reasonably  made.  They  are  usually  construed  ac- 
cording to  what  is  known  as  "York-Antwerp  rules,"  framed  by 
conventions  of  shipowners,  merchants  and  underwriters  held 
many  years  ago  in  the  two  cities  indicated.  That  basis  for  the 
adjustment  of  general  average  losses -is  often  indicated  in  the 
bills  of  lading.  In  the  absence  of  such  a  provision  it  is  the  laws 
of  the  country  of  destination  of  the  ship  which  govern  adjust- 
ment. 

As  examples  of  looses  among  many  others  admitted  as  general 
average  the  following  may  be  mentioned :  Damage  sustained  by 
a  steamer's  engines  when  used  to  float  her  when  ashore  in  a 
dangerous  position ;  masts,  spars,  sails  or  rigging  cut  away  for 
the  common  safety  during  a  storm ;  loss  of  cargo  and  the  freight 
thereon,  when  thrown  overboard;  damage  to  cargo,  which  has 
not  been  on  fire  itself,  by  water  used  to  extinguish  a  fire  on 
board;  wages  and  provisions  of  the  master  and  crew  during 
detention  in  a  port  of  refuge  and  expenses  there  incurred;  cost 
of  salvage  of  ship  and  cargo  when  picked  up  at  sea  or  when 
ashore. 

Particular  Average.— "Particular  Average,"  as  has  been 
noted,  is  virtually  identical  with  "partial  damage."  The 
measure  of  indemnity  for  partial  loss  on  goods  arriving  at  des- 
tination in  a  damaged  condition  is  defined  by  the  British  law  in 
the  following  words:  "Where  the  whole  or  any  part  of  the 
goods  or  merchandise  insured  has  been  delivered  damaged  at  its 
destination,  the  measure  of  indemnity  is  such  proportion  of  the 
sum  fixed  by  the  policj^  as  the  difference  between  the  gross 
sound  and  damaged  values  at  the  place  of  arrival  bears  to  the 


442  PRACTICAL  EXPORTING 

gross  sound  value."  The  damaged  value  of  goods  is  what  they 
realize  by  sale.  The  sound  value  is  their  market  value  had 
they  arrived  sound,  as  taken  on  the  day  of  sale  of  the  damaged 
portion.  The  difference  between  the  two  values  represents  the 
depreciation  of  loss  and  this  ratio  of  depreciation  is  then  applied 
to  the  insured  value  of  the  damaged  goods. 

'Particular  Average  is  chiefly  called  to  the  attention  of  ship- 
pers or  importers  who  are  fortunate  enough  not  to  experience 
losses  or  necessity  for  claims,  through  that  clause  in  the  policy 
called  the  "memorandum"  which  exempts  the  insurers  from  cer- 
tain percentages  of  loss,  or,  in  other  words,  declares  certain  goods 
free  of  particular  average,  i.e.,  not  subject  to  claims  for 
damage,  unless  the  damage  amounts  to  certain  stated  percent- 
ages. 

"F.  P.  A." — -The  custom  of  insurance  underwriters  in  de- 
manding that  certain  kinds  of  goods  be  free  from  claim  for  loss 
unless  such  loss  amounts  to  1  per  cent.,  3  per  cent.,  5  per  cent., 
7  per  cent,  or  some  other  per  cent,  of  their  total  value,  originated 
in  the  very  early  days  of  modern  insurance  and  has  given  rise 
to  scores  of  lawsuits.  As  we  have  seen,  the  theory  is  that  the 
percentage  of  the  "franchise,"  as  it  is  called,  is  only  a  fair  risk 
for  a  shipper  himself  to  carry  in  view  of  the  reduced  rate  of 
premium  demanded  for  such  insurance. 

"With  Average"  and  F.  P.  A.  Compared. — Insurance  AVith 
Particular  Average,  equivalent  to  A.  A.  R.  (against  all  risks),  is 
adopted  in  the  case  of  goods  liable  to  be  damaged  through  rough 
handling  or  exposure  to  the  weather  or  whenever  they  can  be 
spoiled  to  any  extent  by  water,  owing  to  the  covering  of  the  pack- 
ages not  being  of  character  suitable  to  withstand  immersion.  In 
practice,  however,  insurance  With  Particular  Average  is  more 
or  less  confined  to  textiles  or  delicate  machinery  and  the  higher 
rate  may  be  lowered  by  packing  in  tin  lined  cases.  Many  of  the 
large  British  shippers  of  piece-goods  habitually  cover  gray  goods 
on  F.  P.  A.  terms  when  printed  and  colored  goods  are  insured 
With  Particular  Average  to  the  same  markets.  This  is  because 
gray  cloth  does  not  deteriorate  so  materially  through  contact  with 
sea  water. 

By  way  of  further  illustration"  of  conditions  attending  insur- 
ance free  of  particular  average,  another  quotation  may  be  of- 


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Insurance  Company  of  North  America 

PHILADELPHIA. 

Policy  No. 50376  J/o.     141347 

(^c. -=D..r.  New  York,  August  31 

Wo\&  is  to  dCrtlfl?,  That  on         thia  date     .  this  Company  insured, 

under  Policy  made  for  BROWHE,   GREENE     i  .  WHYTE    ^  -  -  -  -  -  -t__, 

of  CiDcimiati ~ _       $1835. on 

Twelve   (12)    Caees  Gaaollne  Euginee  and  Parts  -  -----       »  valued  at 

-.-___-  -  -  -     sum  inauxed  ------____     ,  shipped  on  board  of  the 

r  ---.-^T     S*S.      "ADEIATIC" . -...rr. -...- ..^--^^^^^ 

■^.r,...--.-- New  York  to  LiTerpool  --t?--^-*!..,,^;.^,-,..^^. -r,..,?t:„,.^  -  -,-  -,-r 


It  is  hereby  understood  and  agreed  tl 

BROWNE,    GREEHE 

which  represents  and  takes  til 

Policy-holder,  (for  the  purpt  ^^        ^^ „  _ 

the  property  were  covered  by  kap^cial  pdicr'^J 
liability  for  unpaid  premiums.        ilXVW^ 


^P»^VuU\\<^»  loss  is  payable  to  the  order  of 

\\\u^  ""  surrender  of  this  Certificate. 

qJfV;^,Hnd  tuaVW  ^'I  the  rights  of  the  Original 


ghts  of  the  Original 
i  or  damage),  as  fully  as  if 
hereof,  and  is  free  from  any 


Not  valid  unless 
such  purpose. 


ntersignedVpyilie  Attorney  of  the  Company  especially  appointed  foi 


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MARKS    AND   Nli> 

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C1.AVSES 

-       MACHINERY  CLAUSE 

,3| 

\340  >          H08. 
LIVERPOOL 

1-12 

In  case  of  loss  or  injury  to  any  part                  1 
ofamachine.consisting,  when  complete               - 
for  sale  or  use,  of  several  parts,  the  in.              I't 
surersshallonlybcliable.rortheinsur-     t,        jj 
ed  value  of  the  part  lost  or  damaged.       -S         "s 

*■       1- 

Oplion  lo  the  isBored  1»  collect  loss  under  this     ?        -«  | 
cerlilicale  al  Ihe  elTices  of  the  Underwriters  in      £«     .|  a> 
New  York,  upon  presentation  of  this  cerlificale     -5  3      g  s' 

While  on  railroad,  free  of  claim  f«r     51     ^^ 
loss  or  damage  unless  caused  by  fire,     "si   1- 
collision  or  derailment.                           "' "     S| 

i  1 
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• 

Form  23 — Certificate  of  Marine  Insurance. 

r«tiG«t...  .imilsr  to  Ibi.  .r,  .opplicd  ..  .i.*ciDc  ihlpm.ol.  .r.  d.d.red 

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MARINE  INSURANCE  443 

fered  from  William  C.  Downs'  articles  on  this  subject  in  the 
American  Exporter: 

"Misunderstandings  are  liable  to  occur  in  regard  to  the  in- 
surance of  goods  which  from  their  very  nature  are  usually  con- 
sidered free  of  particular  average,  and  which  in  default  of  any 
specific  instructions  are  so  covered  by  the  shipper.  In  many 
cases,  however,  such  goods  can  be  insured  'with  average'  in  con- 
sideration of  the  payment  of  an  extra  premium,  and  it  may  suit 
the  importer  to  pay  the  higher  rate  to  cover  the  greater  risk,  or 
it  may  have  been  his  custom  to  have  received  them  from  other 
sources  so  insured.  In  such  an  event  it  is  clearly  the  duty  of 
the  importer  to  advise  the  shipper  that  he  desires  the  more  ample 
form  of  insurance.  On  the  other  hand,  the  shipper  may  be 
guilty  of  negligence  should  he  not  call  the  buyer's  attention  to 
the  possibility  of  obtaining  particular  average  on  such  goods  and 
ask  for  definite  instructions. 

"The  usual  printed  form  of  an  insurance  policy  gives  a  long 
list  of  articles  which  are  considered  free  of  particular  average, 
among  which  generally  appear  'all  articles  manufactured  of  iron 
and  steel.'  Edge  tools  and  cutlery  are  certainly  manvifactured 
of  steel,  but  if  they  were  wet  by  sea  water  they  would  undoubt- 
edly suffer  partial  damage  which  would  detract  from  their  sale 
value.  The  average  importer  of  goods,  not  too  familiar  with  the 
technicalities  of  marine  policies,  would  in  all  probability,  if  a 
prevous  understanding  did  not  exist,  expect  somebody  to  make 
good  his  loss  and  would  feel  aggrieved  if  not  satisfied." 

Some  other  considerations  of  the  free  of  particular  average 
clause  in  the  policy  will  be  referred  to  in  a  general  examination 
of  the  phraseology  of  those  documents. 

POLICIES  AND  CERTIFICATES 

Large  shippers  rarely  consult  their  original  Policies  of  marine, 
insurance,  perhaps  never  have  occasion  to  look  at  them  after 
they  have  first  been  arranged  for.  Shipments  of  goods,  as  they 
are  made,  are  usually  "declared"  against  an  "open  policy"^ 
and  it  is  certificates "  of  insurance  which  are  the  documents 
usually  handled,  forwarded  to  consignees  abroad,  or  used  for 

1  See  Form  22. 

2  See  Form  23. 


444  PRACTICAL  EXPORTING 

banking  purposes.  Practices  in  declaring  value  for  marine  in- 
surance illustrate  another  point  of  difference  between  that  pro- 
tection and  fire  insurance,  for  example.  It  should  be  noted  that 
we  can  here  only  deal  with  insurance  on  cargo.  Space  does  not 
permit  a  consideration  of  insurance  on  the  hull,  that  is,  on  ships 
as  such,  the  hull  representing  the  whole  vessel. 

Open  and  Floating  Policies. — Shippers  who  are  constantly 
forwarding  goods  over  sea  usually  arrange  for  one  or  more  poli- 
cies covering  risks  up  to  large  sums  of  money  and  including  in 
their  terms  all  of  the  various  contingencies  against  which  protec; 
tion  is  desired  for  a  given  length  of  time,  for  example,  pilfering, 
leakage,  breakage,  from  warehouse  to  warehouse,  fire  risks,  etc., 
at  certain  specified  rates  of  premium  according  to  destination  of 
the  goods  and  according  to  the  rating  of  steamships  which  trans- 
port the  goods.  These  Open  Policies,  as  they  are  called,  remain 
in  force  for  a  given  length  of  time  or  until  the  values  covered 
have  been  exhausted.  As  individual  shipments  are  made  the 
shipper  notifies  the  insurance  company  concerned  that  protection 
under  the  open  policy  is  required  for  certain  values  covering 
goods  described,  shipped  by  such  and  such  a  boat,  on  such  and 
such  a  date,  etc.  The  risk  thus  covered  is  endorsed  on  the  open 
policy  and  a  certificate  of  insurance  is  returned  to  the  shipper  by 
the  company,  which  has  all  the  force  of  an  original  policy,  al- 
though the  full  terms  of  the  original  are  not  repeated  in  it  and 
it  must  be  construed  according  to  the  terms  of  the  full  original. 

Large  foreign  importers  of  goods,  particularly  if  they  are  deal- 
ing with  a  great  many  suppliers  in  the  United  States  and  per- 
haps in  Europe  also,  often  arrange  for  their  own  insurance,  tak- 
ing out  for  themselves"  in  their  own  localities  very  much  such  a 
policy  of  insurance  as  has  just  be  described.  When  this  is 
done  manufacturers  or  shippers  of  goods  which  such  houses  may 
order  are  instructed  to  declare  values  of  such  shipments  with  the 
company  which  has  issued  the  consignee's  policy.  Such  notifica- 
tion is  all  that  is  necessary  and  the  risk  is  held  covered  from  the 
date  of  the  sailing  of  the  vessel  from  port.  Then,  shippers  do 
not  cover  the  risk  under  their  own  policy;  it  is  the  consignee's 
policy  that  is  used. 

Declaring  Values. — IMarine  insurance,  it  has  just  been  re- 
marked, differs  from  fire  insurance  in  another  particular.     In 


MARINE  INSURANCE  445 

case  of  total  loss  the  actual  value  has  to  be  proven  under  a  fire 
insurance  policy.  No  proof  of  value  is  required  in  such  cases 
under  a  marine  insurance  policy.  The  insured  value  is  ac- 
cepted as  the  indemnity  value  in  case  of  total  loss.  In  case  of 
partial  loss,  as  has  already  been  intimated,  the  amount  of  such 
loss  is  determined  by  a  comparison  of  the  damaged  value  and 
the  sound  value  with  the  insured  value. 

The  actual  value  of  a  shipment  is  seldom  that  declared  for 
marine  insurance  protection.  The  cost  of  the  goods  placed  on 
board  vessel,  including  all  charges  up  to  that  point,  is  increased 
from  10  per  cent,  to  20  per  cent,  in  order  to  cover  the  costs  of 
ocean  freights,  other  incidentals,  and  possibly,  sometimes,  loss 
of  the  foreign  importer  in  the  non-arrival  of  goods  on  which  he 
was  depending. 

Fractional  parts  of  a  dollar  and  even  odd  dollars  are  always 
excluded  from  the  amount  so  declared  for  insurance  which  is 
usually  made  up  to  the  nearest  $25  or  $50  above  the  figured 
amount.  Thus,  if  the  amount  were  to  come  out  at  say  $790, 
the  amount  declared  for  insurance  would  be  $800. 

Complete  indemnity  cannot  be  obtained  by  the  assured  unless 
all  the  elements  which  enter  into  the  gross  sound  value  of  goods 
shall  be  computed.  The  contract  of  marine  insurance  is  not 
intended  to  benefit  the  interested  parties  by  returning  any 
actual  profit.  It  is  a  contract  of  indemnity  only.  Prospective 
profits  are  not  as  a  rule  insurable  as  such.  However,  it  is  clear 
that  the  market  value  of  goods  at  point  of  destination  will  nec- 
essarily include  a  certain  element'  of  profit  and  such  market 
value  may  be  insured.  Attention  is  called  to  still  another  ele- 
ment in  this  value  against  which  insurance  may  be  effected,  by 
Mr.  Downs,  who  writes : 

Insurance  of  Foreig-n  Duties. — "Under  a  marine  policy  al- 
most any  kind  of  risk  may  be  covered  if  the  insured  is  willing 
to  pay  for  it,  and  it  may  be  stated  in  passing  that  he  gets  ex- 
actly the  amount  of  insurance  for  which  he  has  paid.  If  he  has 
valued  his  merchandise  at  10  per  cent,  or  even  20  per  cent,  more 
than  its  actual  cost  and  pays  a  premium  on  that  valuation,  he 
will  receive  that  amount  in  case  the  merchandise  is  lost,  or  in 
case  of  partial  loss  the  exact  percentage  of  that  loss  applied  to 
the  insured  amount.    Yet  a  lack  of  familiarity  with  the  estab- 


446  PKACTICAL  EXPORTING 

lislied  niles  of  marine  adjustments  may  at  times  lead  an  im- 
porter to  believe  that  he  has  been  unfairly  treated  by  his  insurers. 
This  is  liable  to  happen  in  countries  having  high  import  duties 
from  which  no  rebates  are  allowed  in  case  the  goods  are  re- 
ceived in  a  damaged  condition,  or  when  the  damage  has  not  been 
discovered  until  after  the  duties  have  been  paid  and  the  goods 
despatched  for  consumption. 

"Suppose  that  the  actual  invoice  value  of  the  merchandise  is 
$1,000,  and  that  it  has  been  insured  for  $1,100.  Import  duties 
of  50  per  cent,  ad  valorem  are  paid,  making  the  market  value 
of  the  goods  in  sound  condition  $1,500.  It  is  found,  however, 
that  the  goods  have  been  badly  damaged  by  sea  water  on  the 
voyage,  and  the  importer  calls  in  the  underwriter's  agent,  who 
orders  them  sold  at  public  auction  in  which  they  bring  only 
$1,000.  It  is  evident  that  the  importer's  loss  is  $500.  The  un- 
derwriter's agent  duly  issues  a  certificate  to  the  effect  that  the 
sound  value  of  the  merchandise  was  $1,500  and  that  only  $1,000 
was  realized,  which  certificate  the  importer  forwards  to  his  in- 
surers, expecting  to  be  reimbursed  for  his  loss,  as  he  was  fully 
insured  and  his  documents  are  all  in  order.  He  receives,  how- 
ever, an  adjustment  showing  that  the  percentage  of  loss  being 
3314  per  cent.,  he  is  entitled  to  receive  33^/^  per  cent,  of  $1,100, 
or  only  $366.67.  He  is  consequently  still  out  of  pocket  $133.33, 
which  he  cannot  recover  from  any  source. 

"The  higher  the  rate  of  duties  the  greater  will  his  loss  be. 
Unless  he  has  already  been  informed  that  it  is  the  universal 
practice  in  the  adjustment  of  marine  losses  that  paid  import 
duties  shall  be  added  to  the  cost  of  the  merchandise  to  deter- 
mine its  sound  market  value  and  that  the  percentage  of  loss  to 
that  value  shall  be  applied  to  the  insured  amount,  he  will  feel 
aggrieved  and  suspect  that  his  shipper  has  treated  him  unfairly. 

' '  There  are  two  remedies  for  this  difficulty.  The  first  is  that 
goods  should  always  be  inspected  before  duties  are  paid,  and 
losses  adjusted  before  the  merchandise  is  withdrawn  from  the 
custom  house.  It  is  obvious,  however,  that  in  most  cases  this 
cannot  be  done.  The  second  remedy  is  that  duties  shall  also  be 
insured.  This  can  be  done  for  a  small  additional  premium, 
generally  only  a  small  percentage  of  the  regular  premium." 

Cost  of  Premiums. — Premiums  for  marine  insurance  protec- 


MARINE  INSURANCE  4-17 

tion  vary  not  only  according  to  the  kind  of  protection  required 
but  according  to  tlie  nature  of  the  goods,  tlie  character  of  the 
ship  transporting  them  and  the  port  of  destination.  In  a  very 
rough  and  general  way  it  may  be  said  that  in  normal  times 
ordinary  rates  of  marine  insurance  may  range  from  say  one 
quarter  of  1  per  cent.,  to  the  principal  European  ports,  up  to 
li/>  per  cent,  or  even  2  per  cent,  on  voyages  around  Cape  Horn 
to  the  w^est  coast  of  South  America.  Ordinary  rates  of  pre- 
mium are  not  modified  according  to  the  flag  borne  by  the  vessel, 
in  normal  times,  but  may  be  by  its  rating  by  inspectors. 

If  a  policy  for  which  a  premium  at  the  rate  of  one-half  of  1 
per  cent,  may  be  demanded  as  covering  ordinary  conditions,  is 
desired  broadened  to  include  contract  for  indemnity  against 
pilfering,  the  usual  rate  may  be  increased  to,  say  five-eighths  or 
much  more.  This  or  other  risks — such,  for  example,  as  protec- 
tion against  risk  of  breakage  (as  of  machinery),  or  against 
leakage  of  liquids — usually  require  an  inspection  by  insurance 
authorities  of  the  usual  packages  shipped  prior  to  a  ruling  as  to 
rates  which  will  be  demanded. 

PHRASEOLOGY  OF  POLICIES 

Old  fashioned,  not  to  say  antique  phraseology  is  still  em- 
ployed in  their  policies  by  the  marine  insurance  companies, 
much  of  it  really  unintelligible  to  the  novice  without  explana- 
tion. Our  American  policies,  however,  are  much  simpler  and 
clearer  than  are  those  used  in  England  where  Lloyds  policy, 
first  adopted  in  1779,  is  still  in  use  although  it  includes  terms 
which  no  one  can  do  more  than  guess  at,  like  the  letters  S.  G. 
appearing  on  its  upper  left  hand  margin,  which  seem  to  have 
absolutely  no  significance.  Among  many  other  expressions  in 
the  policy  the  following  may  be  selected  as  those  most  necessary 
for  the  ordinary  shipper  to  understand. 

The   Voyage. — The   phrase   of  the   policy  reading   "at   and 

from  "  followed  by  the  description  of  the  voyage,  covers 

the  property  of  the  assured  should  his  goods,  already  loaded  on 
the  vessel  while  lying  alongside  her  pier,  be  burned  before  the 
beginning  of  the  voyage.  If  the  policy  only  read  "from  — ■ — " 
the  risk  would  only  begin  with  the  sailing  of  the  ship. 

The  Ship.—' '  Called  the whereof  its  master  for  this  pres- 


448  PRACTICAL  EXPORTING 

ent  voyage  "  identifies  the  vessel  by  which  the  goods  are 

shipped  in  case  there  should  chance  to  be  two  vessels  of  the  same 
name.  In  1805  an  American  ship  called  The  President  was  in 
error  called  in  the  policy  "The  American  ship  President."  In 
a  suit  occurring  in  consequence  it  was  held  that  the  variation 
was  immaterial  because  the  underwriters  had  not  been  misled 
as  to  the  identity  of  the  vessel. 

Loading  on  Board.- — The  ordinary  policy  contains  the  ex- 
pression "beginning  the  adventure  upon  such  goods  and  mer- 
chandise from  the  loading  thereof  aboard  said  ship,"  This 
clause  is  nowadays  invariably  modified  by  a  rider  which  usually 
reads  "including  risk  of  craft  to  and  from  the  ship  or  vessel, 
each  craft  to  be  considered  a  separate  risk."  Unless  so  modi- 
fied the  plain  policy  would  not  apply  until  the  goods  had  actu- 
ally been  placed  on  board  the  vessel.  Many  vessels  are  loaded 
from  lighters  or  barges  while  lying  at  anchor  in  the  stream  and 
are  therefore  exposed  to  considerable  risk.  The  application  of 
the  rider  just  described  has  now  become  so  universal  that  some 
policies  include  it  in  their  printed  provisions. 

Perils  of  the  Sea. — The  term  perils  of  the  sea  has  already 
been  defined.  Under  this  head  in  the  policy,  however,  there 
are  certain  other  expressions  which  are  strange  and  require  ex- 
planation. For  example,  reference  to  "thefts"  as  used  in  the 
policy ;  this  here  refers  to  theft  by  violence  and  does  not  cover 
petty  thievery  or  pilfering  by  crews  or  stevedores,  which  must  be 
covered  by  special  contract  for  which  increased  premium  is  de- 
manded. 

"Jettison"  is  the  throwing  overboard  of  a  part  of  a  cargo 
or  part  of  the  equipment  of  a  ship. 

"Barratry  of  the  master  and  mariners"  is  rare  nowadays, 
though  common  before  the  advent  of  steamships  and  the  cable. 
Barratry  is  described  as  every  wrongful  act  wilfully  committed 
by  the  master  or  crew  to  the  prejudice  of  the  owner  or  char- 
terer. When  a  crew  mutinies  and  seizes  a  ship  and  runs  her 
ashore  or  otherwise  uses  her  for  their  own  purposes,  that  is  con- 
sidered as  barratry.  However,  if  the  owner  himself  connives 
at  the  casting  away  of  a  ship  that  act  is  not  barratry  but  fraud. 

The  word  "warranted"  frequently  occurring  in  insurance 
practice  is  best  described  in  the  language  of  the  English  law. 


MARINE  INSURANCE  449 

A  promissory  warranty  is  said  to  be  "a  warranty  by  which 
the  assured  undertakes  that  some  particuhir  thing  shall  or  shall 
not  be  done  or  that  some  condition  shall  be  fulfilled,  or  whereby 
he  affirms  or  negatives  the  existence  of  a  particular  state  of 
facts." 

The  Memorandum. — The  clause  known  as  the  memorandum 
was  introduced  into  marine  insurance  policies,  as  has  been  ex- 
plained, in  order  to  secure  a  minimum  limit  to  the  under- 
writer's liability  for  damage  to  perishable  articles.  The  terms 
of  the  policy  are  almost  always  modified  by  special  conditions 
attached,  referring  to  contracts  covering  special  goods  or  ship- 
ments. There  is  no  uniformity  at  all  about  the  "franchise," 
that  is,  the  amount  of  the  exemption  of  the  underwriters  from 
liability.  That  exemption  may  be  3  per  cent,  in  one  country  or 
7  per  cent,  in  another  country,  as  referring  to  the  same  com- 
modity. Furthermore,  since  a  large  shipper  might  suft'er  a 
considerable  loss  and  yet  not  be  able  to  recover  from  the  insur- 
ance companies,  the  plan  has  been  adopted  of  breaking  up  a 
large  number  of  packages  into  small  subdivisions,  called  series, 
and  the  liability  of  the  insurance  company  is  made  to  cover  each 
series  in  phrases  reading,  for  example,  "To  pay  average  on  every 
ten  bales  running  landed  numbers,"  or  "to  pay  average  on  each 
package  as  if  separately  insured,"  or  other  similar  phrases. 

English  vs.  American  F.P.A.  Clauses.— What  we  call  the 
F.P.A.  clause  occurs  in  two  different  forms,  one  English  (F.P.- 
A.E.C.),  the  other  American  (F.P.A.A.C).  There  is  an  impor- 
tant difference  between  them  which  has  thus  been  explained : 

"There  is  room  for  misunderstanding  as  to  the  meaning  of 
the  term  'free  of  particular  average'  and  as  to  the  conditions 
under  which  goods  insured  under  that  proviso  would  be  pro- 
tected against  particular  average,  or  partial  damage.  It  should 
be  clearly  understood  whether  the  English  or  the  American  con- 
ditions apply.  The  clause  covering  the  first  reads:  'Free  of 
particular  average  unless  the  vessel  be  stranded,  sunk,  burned  or 
in  collision';  while  the  American  conditions  are  'Free  of  particu- 
lar average  unless  the  damage  be  caused  by  the  vessel  being 
stranded,  sunk,  burned  or  in  collision.'  It  is  evident  that  the 
little  clause  in  the  American  conditions  makes  a  vast  difference 
in  the  application  of  the  insurance.     In  the  first  case,  the  claim 


450  PRACTICAL  EXPORTING 

for  any  partial  damage  is  a  valid  one  from  the  very  fact  that 
the  vessel  met  with  one  of  the  casualties  specified ;  in  the  second 
case  it  must  be  proven  that  the  damage  was  actually  caused  by 
one  of  the  mentioned  mishaps  to  make  a  claim  effective — often 
very  difficult  if  not  impossible  to  prove. 

"The  effect  of  the  different  conditions  may  be  shown  in  the 
ease  of  a  shipment  of  barb  wire,  insured  free  of  particular  aver- 
age, and  carried  by  a  steamer  which  on  leaving  port  collides  with 
another  steamer,  but  without  sustaining  any  damage  that  would 
cause  water  to  be  admitted  to  the  hold  and  reach  the  cargo.  The 
barb  wire,  nevertheless,  on  being  landed  is  found  to  have  been 
wet  by  sea  water  and  rusted  and  otherwise  damaged  to  such  an 
extent  that  on  sale  there  can  be  realized  only  90  per  cent,  of  the 
amount  that  it  would  have  brought  if  it  had  arrived  in  a  sound 
state.  Under  the  English  conditions  the  insured  could  recover 
from  the  underwriters  10  per  cent,  of  the  insured  value;  under 
the  American  conditions  he  would  have  no  claim  whatever. 
Even  if  it  were  shown  that  in  consequence  of  the  collision  seams 
in  the  deck  or  hull  of  the  steamer  opened  and  admitted  water  to 
the  holds,  the  insured  would  be  called  upon  to  prove  that  the 
barb  wire  was  stored  in  the  particular  hold  to  which  the  water 
was  admitted  before  his  claim  for  damage  would  be  recognized 
und(n"  a  strict  interpretation  of  the  American  clause."  ^ 

Added  Clauses. — Tt  has  already  been  observed  that  all  sorts 
of  special  risks  may  be  covered  by  contract.  A  marine  insurance 
policy,  therefore,  may  include  a  great  manj-  added  clauses. 
Some  of  the  commonest  have  already  been  referred  to.  Others 
in  every  day  use  include  those  applying  to  cargo  carried  on  deck ; 
for  example :  "AVarranted  free  from  claim  for  jettison  or  wash- 
ing overboard."  Premiums  of  insurance  for  goods  carried  on 
deck  are  usually  about  double  the  rates  if  carried  under  deck. 
When  such  a  premium  is  paid  the  clause  inserted  is  "Including 
the  risk  of  jettison  and  washing  overboard."  Another  clause 
applying  to  similar  shipments  reads:  "Free  of  claim  for  dam- 
age but  liable  for  the  total  loss  of  a  part  if  amounting  to  5 
per  cent." 

A  clause  applying  especially  to  shipments  of  machinery  reads : 

1  William  C.  Downs  in  American  Exporter. 


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CERTIFICATE    OF    INSURANCE 
WAR     RISK     ONLY 


Insurance  Company   ii    _ 

PHILADELPHIA 


of  North  America 

IRo. 


$     1B25 

(PLACE -o  DATE,  Hew  York,  August  31 

ttbiS  is  to  Certify,    Tlmton  the.       31a.t "day  01 ^Augual..- - .,...19 

this  Company,  in  consideration  of  the  premium  agreed  to  be  paid  insured, 

- ^ BROWIIE,  -GEEENE-  i.-TSHrT-E for 

_._ „ _ _..D2ie ..Thoujaflnd,  Eight ..Huudred.and. - Tw.eiity-f  iv.e „ Dollars 

War  Risk  on„GaB,oliiLe-EiigiJie£_  and^Pazta ,  valued  at  sum  hereby  insured,  per 

('"ofS''}  ~- BxltlBll - S/S -QADRUlIiC'' 

Warranted  sailing  on  or  before SepteJEfo.ex,.-l 


ionr,  but  excluding  d 
0  •rarrnDW  d 


.  Ll-veFpo-ol 

r,  b;  letters  of  mart,  by  takines  kt  lea, 
tea  belligerent 


A'arranted  covering  wl|i(2yiafci^dlrnt^  land. 

Warranted  no  Qerman\  yMJstri^V''\TurkTsli  jwg^  consignee  or  destination; 

and  warranted  free  of  cono^mpatWn  op  k^e^&s^*na^ot  such  ownership,  interest,  consignee,  or 
destination.  /■Cr^\VS\^^ 

On  shipments  to  neutral  coyOTrres  in  Europe  it  is  warranted  that  the  bills  of  lading  shall  show 
the  name  and  address  of  the  neutral  consignee. 

In  cute  of  any  lou  or  mufortune,  it  aball  be  lawful  and  neceauy  to  ted  for  the  leBured,  hio  or  their  fsctore,  eerv&nU  ami  BAsigDa, 

In  ewe  of  loss,  Buch  loss  to  be  paid  in  thirty  daye  alter  full  proofi  of  lo»s,  proofs  of  interest,  and  adjuatmenl  exhibited  to  tbe  itaurer*. 

Iliahereby  underetood  and  agreed  that,  in  CMC  of  loM.BuehloMia  payable  to  the  order  of .._  

_ - - „      BROKEE,  ..  GBEEKE.-5t.  KHYTE on  .urrendet  of  tbi>  policy,  wbioh  conveyB  all  rights 


^  polic; 


fl  ieeued  io  Dollars  ai 


:■  CompaDf  at  Philadelphia  or  to  Mewn-  Wendt  d  Com 


Not  valid  unless  Countersigned 


Countersigned,-. 


^ 


*o^^ 


o^^ 


H  .^P 

34C, 

&  Op. 

LIVERPOOL 


Twelve  (12)  Cases  Gasoline  Engines  and  Parts 


Form  24— Insurance  Against  War  Ruk. 


o 


MARINE  INSURANCE  451 

**In  case  of  loss  or  injury  to  any  part  of  a  machine,  consisting 
when  complete  for  sale  or  use  of  several  parts,  this  company  shall 
only  be  liable  for  the  insured  value  of  the  part  lost  or  damaged. ' ' 
The  foregoing  are  only  specimens  of  the  hundreds  of  special 
clauses  in  frequent  use. 

THE  WAR  RISK 

War  risks  are  not  assumed  in  the  ordinary  contract  of  marine 
insurance.  When  this  protection  is  desired  it  is  necessary  to 
issue  a  separate  policy  in  each  case.^  Until  the  outbreak  of  the 
great  war  in  Europe  in  August,  1914,  most  Americans  had  en- 
tirely forgotten  the  very  existence  of  war  risk  insurance.  Their 
last  practical  experiences  w'cre  in  our  war  with  Spain,  and  then 
Ho  real  risks  were  involved,  and  that  kind  of  insurance  was 
chiefly  speculation.  The  developments  of  the  European  War  not 
only  made  insurance  against  war  risk  imperative,  but  introduced 
new  conditions  into  insurance  practice  in  this  regard.  No  "war 
risk, "  be  it  noted,  is  ever  required  when  the  world  is  at  peace. 

The  Flag". — The  particular  steamer  carrying  a  shipment  for- 
ward must  be  specified  in  all  applications  for  war  risk  insurance 
as  well  as  its  nationality,  that  is,  the  flag  of  the  steamer.  Natur- 
ally, higher  rates  are  charged  for  the  greater  hazard  involved  in 
the  sailing  of  steamers  owned  by  belligerents  than  those  owned 
by  neutrals,  at  least  during  the  European  War,  on  other  routes 
than  those  of  the  North  Atlantic  and  the  Mediterranean  where 
the  operations  of  German  submarines  came  to  be  directed  im- 
partially against  vessels  of  all  flags.  For  example,  at  the  out- 
break of  the  European  War,  no  war  risk  insurance  was  to  be 
had  on  steamers  flying  German,  Austrian  or  Turkish  flags,  and 
there  was  soon  no  occasion  for  such  insurance  as  those  vessels 
quickly  disappeared  from  the  seas.  Steamers  flying  the  British, 
French,  Russian,  Italian  or  Japanese  flags  were,  however,  subject 
to  war  risk  insurance,  although  taking  a  higher  rate  than 
steamers  owned  in  neutral  countries,  that  premium  being  about 
double  the  other. 

War  risks  are  only  assumed  while  the  property  is  actually 
afloat.     This  is  usually  covered  by  a  phrase  in  the  contract  read- 

1  See  Form  24. 


452  PRACTICAL  EXPORTING 

ing  much  as  follows:  "Warranted  covering  while  water  borne 
only  and  excluding  any  risks  on  land." 

Ownership  of  Merchandise. — Other  conditions  affecting  insur- 
ance against  war  risks  six  months  after  the  outbreak  of  European 
hostilities  were  thus  explained  by  C.  M.  Campbell,  of  the  Insur- 
ance Company  of  North  America,  in  a  letter  to  the  author: 

"In  view  of  the  practice  of  the  belligerents  controlling  the 
high  seas  in  detaining  steamers  flying  neutral  flags,  in  order  to 
examine  the  cargo  to  determine  whether  a  vessel  carries  any  mer- 
chandise absolute  contraband  of  war  which  may  be  ultimately 
consigned  to  her  enemies,  it  is  necessary  to  attach  certain  clauses 
eliminating  this  protection,  as  the  underwriters  will  not  assume 
any  expense,  loss  or  damage  incurred  thereby.  Further,  no  mer- 
chandise can  be  insured  which  is  owned  by  German,  Austrian  or 
Turkish  subjects  or  citizens,  for  the  reason  that  this  would  be 
considered  absolute  contraband  and  condemned,  irrespective  of 
its  nature.  It  is,  therefore,  necessary  to  protect  the  under- 
writer's interest  that  certain  clauses  be  used,  and  in  our  case,  the 
following  clauses  are  affixed  to  certificates : 

"A"  "Warranted  no  German,  Austrian  or  Turkish  Owner- 
ship, Interest,  Consignee,  or  Destination ;  and  warranted  free  of 
condemnation  on  the  ground  of  ^ich  Ownership,  Interest,  Con- 
signee or  Destination." 

"B"  "Warranted  free  from  any  expense,  loss  and  for  dam- 
age arising  from  capture,  seizure,  arrest,  restraint,  preemption 
or  detainments  by  the  British  Government  or  their  Allies. ' ' 

' '  In  the  case  of  merchandise  consigned  directly  to  British  sub- 
jects or  their  Allies,  the  clause  marked  'B'  is  not  attached,  the 
reason  for  its  attachment  not  existing;  but  on  shipments  made 
to  Great  Britain  or  her  Allies,  but  destined  ultimately  for  con- 
signees in  other  neutral  countries,  for  instance,  Spain,  'A' 
Clause,  as  well  as  'B'  Clause,  are  both  included  for  the  reason 
that  there  is  no  assurance  at  the  time  of  accepting  the  risk  that 
a  steamer  flying  the  British  flag,  or  that  of  one  of  her  Allies,  will 
carry  the  shipment  to  ultimate  destination,  and,  there  is,  there- 
fore, the  existing  likelihood,  in  the  case  of  a  neutral  steamer,  of 
her  being  detained  for  examination  by  any  one  of  the  Allies." 

Government  Insurance. — A  Bureau  of  War  Risk  Insurance  in 
the  United  States  Treasury  Department  was  established  by  Act 


MARINE  INSURANCE  453 

of  Congress  in  August,  1914.  It  followed  shortly  after  the  estab- 
lishment of  a  similar  Government  insurance  scheme  by  Great 
Britain.  The  sum  of  $5,000,000  was  appropriated  by  Congress 
as  a  fund  to  be  placed  at  the  disposal  of  the  new  Bureau  to  meet 
possible  losses  to  American  shipping.  A  year  later  the  opera- 
tions of  the  Bureau  were  officially  reported  to  show  large  profits. 
The  resources  of  the  Bureau  were  afterward  multiplied  many 
times  over  to  provide  protection  for  the  large  fleet  which  the 
United  States  commandeered  and  built  after  their  entrance  into 
the  War,  The  law  provided  that  protection  should  be  confined 
strictly  to  American  owners  of  vessels  and  cargo,  that  is,  to  ships 
flying  the  American  flag,  and  accordingly  all  cargo  policies  were 
imprinted  with  the  following  clause :  ' '  Warranted  that  the  title 
to  the  property  insured  remains  continuously  in  citizens  of  the 
United  States  during  the  term  of  this  policy." 

The  Bureau  was  not  empowered  to  issue  any  other  insurance 
than  that  against  risks  of  war  and  such  risks  on  cargo  could  only 
be  accepted  when  usual  marine  risks  on  the  same  cargo  had  pre- 
viously been  issued  by  approved  companies.  While  terms  and 
necessary  clauses  naturally  and  frequently  varied  according  to 
conditions  and  the  nature  of  each  risk,  the  following  may  be  re- 
garded as  typical  high  rates  for  insurance  on  cargo  in  American 
ships,  rates,  almost  if  not  quite  unprecedented  in  history,  and  re- 
flecting the  danger  to  shipping  of  German  submarine  piracy : 

Between  ports  of  the  United  States,  its  possessions  or  any 
ports  in  tlie  Western  Hemisphere,  from  ^/^  to  1^  per  cent.  Be- 
tween ports  on  the  west  coast  of  the  United  States  and  Japan, 
China,  Australasia  and  East  of  Good  Hope  generally,  from  % 
to  %  per  cent.,  or  from  the  east  coast  of  the  United  States  via 
Panama  Canal,  ^2  to  1  per  cent.  To  European  or  Mediter- 
ranean ports,  and  not  north  of  Havre,  in  Europe,  nor  east  of 
Sicily,  in  the  Mediterranean,  from  5  to  20  per  cent.  To  other 
ports,  from  4  to  25  per  cent.  These  rates,  be  it  obseri'^ed,  applied 
to  the  war  risk  only  and  did  not  include  usual  marine  protec- 
tion. 

COLLECTION  OP  INSURANCE  CLAIMS 

Although  the  collection  of  claims  for  loss  or  damage  is  usually 
assumed  to  be  the  duty  of  the  consignee,  it  actually  is  often 


454  PRACTICAL  EXPORTING 

performed  for  them  by  the  shippers,  usually  as  a  matter  of 
courtesy.  The  shippers  do  not  assume  any  responsibility,  how- 
ever, but  merely  act  as  agents  for  the  consignee.  Owing  to 
many  facilities  to  be  obtained  in  the  collection  of  claims  when  the 
insuring  company  is  represented  at  port  or  in  the  country  of 
destination  by  resident  agents  or  some  other  organization,  it  is 
always  desirable  that  policies  be  secured  from  companies  so  rep- 
resented abroad.  Any  comjoany  will  accept  statements  made 
by  one  of  its  own  agents  with  far  less  hesitation  than  reports 
from  other  authorities.  The  burden  of  proof  is  always  on  the 
insured  to  sustain  his  claim  for  loss.  The  first  step  necessary  is 
to  satisfy  one's  self  that  the  loss  is  one  actually  covered  by  the 
terms  of  the  policy. 

Placing  Responsibility. — There  may  often  be  a  question 
whether  the  ship  owners  or  the  insurance  companies  are  responsi- 
ble for  some  losses.  A  receiver  of  cotton  seed  oil  in  some  foreign 
country  may  find  that  he  has  suffered  leakage  greater  than  the 
"under  1  per  cent."  apparently  owing  to  shifting  or  chafing  of 
the  cargo.  A  receiver  of  paper  may  find  that  his  goods  have 
been  seriously  damaged  by  leakage  from  neighboring  barrels  of 
lubricating  oil,  probably  caused  by  similar  reasons.  Shall  such 
owners  present  their  claims  to  shipowners  or  to  underwriters? 

It  is  the  shipowner  who  will  be  responsible  in  such  instances 
unless,  as  usually  happens,  the  captain  of  the  vessel  has  imme- 
diately upon  his  arrival  in  port  filed  what  is  known  as  a  Protest.* 
If  his  vessel  has  experienced  in  the  course  of  the  voyage  any  un- 
usually rough  weather  or  other  conditions  which  have  led  the 
captain  to  believe  that  shifting  or  damage  may  have  taken  place 
in  the  cargo,  he  is  quite  sure  to  file  such  a  Protest  duly  attested 
before  his  consul  at  port  of  destination.  The  document 
will  recite  the  incidents  of  the  voyage  which  it  is  feared  may 
have  caused  damage,  and  in  consequence  disclaim  responsi- 
bility. When  such  a  Protest  has  been  filed,  claim  for  damage 
must  be  laid  before  the  insurance  people  who  may,  but  usually 
do  not,  dispute  the  captain's  sworn  allegations. 

Procedure  in  Collecting. — A  good  epitome  of  the  usual  prac- 
tice, when  properly  insured  goods  have  been  received  in  a  dam- 

1  Roe  Form  2.'). 


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xahiteb  States  of  Hinecica 

STATE  Of  NEW   YORK.! 
CITY  OF  NEW  YORkJ 
Co  all  people  to  toftom  tbcse  JptcBcnts  sball  come  or  mag  Contetn: 


i 


1,0.  V.  Schlichter,  a  Public  Notary  In  and  for  the  Courtly  af 
King!,  and  Stale  oj  New  York,  by  letters  Patent,  under  the  Great 
Seal  of  said  Slate  duly  commissioned  and  suorn.  residiny  in  said 
County,  and  havinij  filed  a  certified  copy  of  my  appointment  with  my 
autorjraph   siijnalure   in   the   Clerii's    Office    of    the    County    of    New 

York,  ©cnD  ©tteting: 

Jttnotn  Pe,  that  on  the  third  day  of  March  in  the  year  of  our  Lord  one  thousand  nine  hun- 
dred and  fifteen  before  a  Notary  Public  appeared  G.  Barstad,  Master  of  the 
steamer  called  the  '  'WASCANA\4  and  noted  in  due  form  of  law  with  him  the  said  No- 
tary his  Protest  for  the  uses  and  purposes  hereinafter  mentioned,  and  now,  on  this  day,  to 
wit,  the  day  of  the  dale  hereof,  before  me,  the  said  Notary,  at  the  City  of  New  York,  afore- 
said, again  comes  the  said  G.  Barstad  and  requires  me  to  extend  his  Protest,  and  together 
with  the  said  G.  Barstad  also  came  Peder  Pedersen,    Chief  Officer,   Kristian 

Eilertsen,  Boatswain  and  Jolm  Carlson,  Seaman,    

belonging  to  the  aforesaid  vessel,  all  of  whom  being  by  me  duly  sworn,  voluntarily,  freely 
and  solemnly  do  declare,  and  depose  as  follows:  That  is  to  say.  that  on  the  second  day 
of  February  last,  he,  the  said  G.  Barstad  departed  in  and  with  the  said  vessel  as  Master 
thereof,  from  Santos  having  on  board  the  said  vessel  a  Cargo  of  coffee,  laden  there 
and  at  Rio  de  Janeiro  and  bound  for  the  Port  of  New  York:  that  the  said  vessel  was 
then  stout,  staunch  and  strong;  had  her  cargo  well  and  sufficiently  stowed  and  secured,  was 
•well  masted,  manned,  tackled,  victualed,  appareled  and  appointed:  and  was  in  every  re- 
spect fit  for  sea  and  the  voyage  she  was  about  to  undertake. 

At  6  A.M.,  the  vessel  proceeded  on  the  voyage,  variable 
weather  being  experienced  with  nothing  worthy  of  note  herein 
occurring  until 

Feb.  18th  when  she  arrived  at  Barbados.  A  supply  of  coal  was  received 
and  on 

Feb.  19th  the  voyage  was  resumed. 

Feb.  21st  In  the  latter  part  a  strong  Northerly  gale  was  experienced 
accompanied  by  a  high  sea  in  which  the  vessel  pitched  and 
labored  heavily  and  shipped  much  water  over  forward. 

Feb.  22  &  2Srd.  The  gale  continued  with  a  heavy  sea  running  and  the 

vessel  pitched  and  labored  heavily  and  shipped  much  water 
fore  and  aft. 

Feb.  24th  The  weather  moderated  but  on 

Feb.  25th  a  gale  was  encountered,  accompanied  by  a  high  cross  sea 

causing  the  vessel  to  pitch  and  labor  violently  and  to  ship 
large  quantities  of  water  fore  and  aft. 

Feb.  26th  The  gale  continued,  withhurricane  force,  and  there  was  a 

tremendous  sea  running  causing  the  vessel  to  pitch  and  labor 
heavily  and  to  ship  large  quantities  of  water  fore  and  aft, 
heavy  seas  breaking  on  board  continually  with  great  force 
and  the  top  tarpaulin  on  No.  I  hatch  was  torn  being  secured 


i 


again  as  well  as  possible,  considerable  water,  however, 
finding  its  way  into  ttie  hold  before  this  could  be  done  , 

Feb.  27th  There  was  no  abatement  in  the  weather  during  this  and  the 
following  day  and  the  vessel  continued  to  pitch  and  labor 
heavily  and  to  ship  large  quantities  of  water  fore  and  aft. 

March  1st  The  weather  moderated  somewhat  but  the  sea  continued  high 

and  the  vessel  pitched  and  labored  heavily  and  shipped  much 
water. 

March  2nd  The  vessel  arrived  in  New  York. 


On  discharge  of  cargo  it  was  found  that  owing  to  the  pitch- 
ing and  laboring  of  the  vessel  in  heavy  weather  met  with  on 
the  voyage,  as  above  set  forth,  some  of  the  riveting  in  the 
bow  plating  had  been  damaged  in  consequence  of  which  sea- 
water  found  its  way  into  the  fore  peak,  and  that  owing  to  the 
straining  of  the  forward  bulkhead  in  the  heavy  weather  water 
had  penetrated  into  No.  1  lower  h^d  and  damaged  bags  of 
coffee  stowed  there;  also  that  owing  to  the  tearing  of  the 
tarpaulin  on  February  26th,  bags  of  coffee  in  No.  1  between 
deck  and  lower  hold  had  been  damaged  by  seawater. 


and  the  said  G ,  Ba.T3ta.d  further  says,  that,  as  all  the  damage  and  injury  •which  already 
has  or  may  hereafter  appear  to  have  happened  or  accrued  to  the  said  vessel  or  her  said  cargo, 
has  been  occasioned  solely  by  the  circumstances  hereinbefore  stated,  and  cannot  nor  oiKjht 
not  to  be  attributed  to  any  insufficiency  of  the  said  vessel  or  default  of  him,  this  deponent,  his 
officers,  or  crew,  and  he  now  requires  me.  the  said  Notary,  to  make  his  Protest  and  this  pub- 
lic act  thereof  that  the  same  may  serve  and  be  of  full  force  and  value,  as  of  right  shall  ap- 
pertain: 9nD  thereupon  the  said  G.  Barstad  doth  Protest,  and  I.  the  said  No- 
tary, at  his  special  instance  and  request,  do  by  these  presents,  publicly  and  solemnly  protest 

against  winds,  weather  and  seas and  against  all  and 

every  accident,  matter  and  thing  had  and  met  with  as  aforesaid,  whereby  or  by  means 
whereof  the  said  vessel  or  her  cargo  has  or  hereafter  shall  appear  to  have  suffered  or  sus- 
tained damage  or  injury,  for  all  losses,  costs,  charges,  expens 
the  said  Steamer  the  owner  or  owners  of  the  said  vessel  or  tl 
of  her  said  cargo,  or  any  other  person  or  persons  interested 
have  or  may  hereafter  pay,  sustain.  Incur  or  be  put  upon,  by  or  on  i 
or  for  which  the  insurer  or  insurers  of  the  said  vessel  or  her  cargo,  is  ( 
to  pay  or  make  contribution  or  average  according  to  custom,  or  tl 
or  obligations;  and  that  no  part  of  such  losses  and  expenses  already  in 
incurred,  do  fall  on   him,  the  said  G.    Barstad,  his  officers  or  cr. 


mages  and  injury  which 
ers,  freighters  or  shippers 
tcerned  in  either,  already 

J  or  are  respectively  liable 
their  respective  contracts 
ed  or  hereafter  to  be 


CbU0    Done    and    Protested    in  the  City  of  New   York,  this  f ift. 
day  of  March  in  the  year  of  our  Lord  one  thousand  nine  hundred  and  f  if 


th 


Sn  CeStimonp  mhtttoU  as  well  the  said  appe, 
have  subscribed  these  presents,  and  I  have  also  a 
hereunto  affixed  the  day  and  year  last  above  writ 


I.  the  said  Notary. 
V  Seal  of  office  to  be 


MASTER,  G.  Barstad 
ist  MATE,  p.  Pedersen 
Boatswain,  Kristian  Eilertsen 
Seaman,  John  Carlson 


G.  V.  Schlichter 
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MARINE  INSURANCE  455 

aged  condition,  is  the  following  from  a  modern  English  author- 
ity: 

"When  goods  arrive  damaged  the  first  duty  of  the  assured 
is  to  inform  his  under'\\'riter  of  the  fact  in  order  that  the  latter 
may  appoint  an  expert,  known  as  a  'Surveyor,'  to  examine  the 
goods.  This  expert  will  report  on  the  nature  and  cause  of  dam- 
age and  advise  what  steps  should  be  taken  to  minimize  the  loss. 
A  very  usual  recommendation  is  that  the  goods  be  sold  by  public 
auction.  The  damaged  value  of  the  goods  is  what  they  realize 
by  sale,  the  sound  value  is  their  market  value  had  they  arrived 
sound,  taken  on  the  day  of  sale  of  the  damaged  portion.  The 
difference  between  the  two  values  represents  the  depreciation  or 
loss,  and  this  depreciation  is  then  applied  to  the  insured  value  of 
the  damaged  goods.  It  should  be  particularly  noticed  that  the 
comparison  must  be  made  between  the  gross  sound  value  and 
the  gross  damaged  value,  that  is,  before  deduction  of  the  ex- 
penses of  sale,  etc.  The  reason  for  this  comparison  of  values  is 
to  eliminate,  as  far  as  the  underwriter  is  concerned,  any  advan- 
tages or  disadvantages  arising  from  the  market  fluctuations. 
The  underwriter  undertakes  to  indemnify  the  assured  from  loss 
arising  from  perils  of  the  sea  and  not  from  loss  arising  from  a 
fall  in  the  market,  consequently  he  is  deprived  of  any  advantage 
that  might  accrue  owing  to  the  goods  being  sold  when  the  mar- 
ket happened  to  be  high,  and  exempt  from  loss  owing  to  the  mar-, 
ket  being  low.  Further,  the  comparison  must  be  made  on  the 
gross  values  to  obtain  a  true  percentage  of  loss."  ^ 

Particulars  of  Loss  Required. — When  suitable  particulars  of 
loss  have  been  properly  filed  there  should  be  but  little  delay  in 
collecting  damages.  Exasperating  delay  and  all  sorts  of  techni- 
calities are,  however,  encountered  when  all  the  necessarj^  docu- 
ments to  prove  a  loss  do  not  accompany  a  claim.  The  necessary 
particulars  have  been  thus  enumerated  in  the  articles  on  marine 
insurance  in  the  American  Exporter,  from  which  liberal  quota- 
tions have  already  been  made. 

"First:  Evidence  that  the  goods  were  actually  shipped.  A 
copy  of  the  bill  of  lading  is  usually  considered  sufficient. 

"Second:     Title  to  the  insurance.     This  is  conveyed  by  the 

1  Heelis,  "Theory  and  Practice  of  Commerce." 


456  PRACTICAL  EXPORTING 

certificate  of  insurance,  and  consequently  this  certificate  should 
form  part  of  the  documents.^ 

"Third:  Of  the  amount  of  damage  sustained.  The  most 
acceptable  document  is  the  formal  sworn  statement  of  the  local 
authorized  representative  of  the  underwriters '  or  Lloyds '  agents. 
If  such  cannot  be  obtained,  the  official  statement  of  the  custom 
house  authorities  certified  by  the  resident  consul  of  the  country 
from  which  the  goods  were  shipped  may  be  substituted. 

' '  Fourth  :  As  to  how  the  damage  was  caused.  This  may  be 
covered  by  the  previous  certificate,  where  the  cause  of  the  dam- 
age is  apparent  to  the  examiners,  but  if  such  is  not  the  case  it 
will  be  necessary  to  obtain  a  certified  copy  of  the  captain's  pro- 
test, which  should  state  whether  during  the  voyage  his  vessel 
has  had  any  accidents  or  unusual  happenings  which  may  have 
caused  damage  to  his  cargo.  If  no  annotation  of  this  kind  ap- 
Iiears  in  the  captain 's  protest  it  is  useless  to  proceed  any  fur- 
ther, as  without  such  evidence  the  claim  will  surely  be  rejected 
by  the  marine  underwriters.  On  the  other  hand,  the  very  lack 
of  such  a  statement  in  the  captain's  protest  or  the  failure  of  the 
captain  to  file  a  protest,  while  it  may  invalidate  the  claim  against 
the  insurance  company,  may  make  the  steamship  company  liable 
for  the  loss.  It  is  quite  important,  then,  that  the  insured  should 
iriform  himself  in  doubtful  cases  of  the  contents  of  the  captain 's 
protest  before  going  to  the  trouble  and  expense  of  drawing  up 
his\elaim  against  the  insurance  company. 

"'if  th :     A   copy  of   the   commercial  invoice   is  usually   re- 
quired. 

"If  all  these  documents  are  submitted  in  due  form,  there  is  no 
reason  why  a  legitimate  claim  should  not  be  promptly  adjusted. 
If  any  of  them  are  missing  the  underwriters  on  technical  grounds 
jnay  delay  payment  until  the  document  is  produced." 

Subrogation. — When  underwriters  settle  claims  for  total  loss 
or  for  damage  they  are  subrogated  to  all  the  rights  which  the  as- 
sured may  have  possessed  of  recovery  from  third  parties.  If 
there  has  been  a  total  loss,  or  what  is  known  as  a  constructive 
total  loss,  the  insurance  company  on  payment  of  claim  for  such 
loss  acquires  title  to  the  subject  matter  insured  and  receives  any 

1  Tlie  certificate  must  be  suitably  reendorsed  to  whoever  is  expected  to 
make  the  collection. 


MARINE  INSURANCE  457 

sums  which  may  afterward  be  realized  from  the  redemption  or 
sale  of  such  property. 

If  the  underwriter  pays  for  partial  loss  he  is  only  subrogated 
to  the  rights  of  the  assured  to  the  extent  of  the  loss  paid.  It 
was  in  this  connection  that  there  arose  the  great  dispute  over  the 
distribution  of  the  $15,000,000  secured  by  the  United  States  from 
England  as  settlement  for  the  Alabama  Claims,  that  is,  losses  to 
American  shipping  incurred  during  the  Civil  War  by  the  depre- 
dations of  the  Confederate  cruisers  Alahania,  Shenandoah  and 
others,  built  and  equipped  in  British  yards.  The  American  ma- 
rine insurance  companies  which  paid  losses  under  their  policies 
acquired  rights  of  subrogation,  which,  however,  the  Congress  of 
the  United  States,  when  the  question  arose  of  the  distribution  of 
the  sums  recovered  from  England,  refused  to  recognize,  advanc- 
ing the  theory  that  the  insurance  companies  ought  to  have  made 
profits  out  of  their  premiums.  It  is  claimed  that  as  a  direct 
consequence  of  the  action  of  Congress  in  1873,  American  marine 
insurance  companies  were  practically  driven  out  of  business.  It 
required  the  unprecedented  conditions  and  extraordinary  com- 
mercial developments  of  the  Great  War  to  bring  American  in- 
surance companies  again  into  the  marine  field. 


CHAPTER  XIV 

FINANCING  FOREIGN  BUSINESS 

Many  Manufacturers  Accept  Foreign  Orders  Only  on  Cash 
Terms — Direct  Kemittances  of  Cash  Compared  With  Letters 
of  Credit  Through  American  Bankers — Open  Accounts  Are  on 
the  Whole  Unusual  in  Export  Trade — When  and  How  They 
May  Safely  Be  Extended  to  Foreign  Customers — Drawing 
Foreign  Drafts  or  Bills  of  Exchange,  and  Their  Various  Forms 
— How  Foreign  Exchange  Bankers  Advance  Cash  Against 
Such  Drafts. 

FINANCING  export  business  is  neither  difficult  nor  com- 
plicated, American  manufacturers  and  exporters  have 
for  years  enjoyed  excellent  banking  facilities.  They  will 
probably  be  increased,  following  the  extraordinary  turn  of  the 
tide  of  the  world's  finances.  The  more  we  have,  the  better.  In 
any  event  there  is  no  lack  of  such  facilities  to-day,  as  certainly 
there  need  be  no  fear  of  any  lack  in  the  future.  However,  some 
considerations  unusual  in  most  of  our  domestic  business  affect 
export  financing  and  must  be  studied  and  understood  by  the  man 
who  wishes  to  do  his  foreign  business  along  profitable  and  pref- 
erably scientific  lines. 

In  considering  this  subject  we  must,  obviously,  confine  our- 
selves to  conditions,  principles  and  practices  as  they  were  prior 
to  the  War  and  as  they  are  likely  to  be  when  international  trade 
resumes  its  normal  trend,  and  as  international  finance  and  credit 
become  stabilized. 

Of  late,  many  have  doubtless  been  impressed  by  the  stock  argu- 
ments of  writers  m  newspapers  and  magazines  as  to  the  necessity 
of  Americans  meeting  the  long  term  credits  said  to  have  been  ex- 
tended by  German  and  other  European  manufacturers  which, 
however,  none  of  these  writers  attempts  to  explain  clearly.  The 
American    manufacturer    hears    of    eight,    twelve    or    eighteen 

458 


FINANCING  FOREIGN  BUSINESS  459 

months'  credits  and  is  frightened.  He  does  not  know  and  no  one 
tells  him  that  such  credits  are  exceptional,  that  ninety  days  is 
the  general  rule  in  international  trading,  and  that  credits  on 
that  basis  are  so  extended  that  the  shipper,  while  giving  credit, 
does  not,  or  need  not,  lose  the  use  of  his  money. 

Nor  does  any  real  or  serious  impression  seem  to  be  made  by  in- 
cidental references  now  and  then  to  one  of  the  most  notable  re- 
sults in  international  trade  of  the  general  reorganization  brought 
about  by  the  European  War  and  the  almost  universal  necessity 
which  developed  of  paying  "cash"  before  goods  were  exported. 
This  is,  the  universal  welcome  given  the  opportunity  of  abolish- 
ing uneconomic,  financially  unsound  and  unsafe  credit  terms — ■ 
a  welcome  even  on  the  part  of  importers  of  foreign  goods  in  other 
countries  who  in  their  turn  have  the  chance  of  revising  their 
own  local  credit  terms,  of  putting  them  back  again  on  a  reason- 
able basis.  They  fully  understand,  too,  that  they  can  import 
more  economically,  can  often  secure  lower  quotations,  when  they 
are  forced  to  shorter  terms  than  some  which  they  may  have  en- 
joyed in  the  past.  This  disposition  on  the  part  of  foreign  im- 
porters of  goods  has  been  discovered  and  emphasized  by  the 
Buenos  Aires  branch  of  the  National  City  Bank  of  New  York, 
for  example,  while  the  American  consul  general  at  Hong  Kong 
reported  in  April,  1915,  that  the  association  of  importers  of 
piece-goods  at  that  point  had  determined  by  formal  vote  that 
' '  the  time  is  now  opportune  in  the  best  interests  of  the  trade  for 
abandoning  the  pernicious  credit  system  .  .  .  and  (the  organiza- 
tion) pledges  itself  in  future  to  sell  piece-goods  and  fancies  on  a 
strict  cash  basis." 

Analyzing  terms  subject  to  which  export  trade  may  be  trans- 
acted we  may  remark:  Cash,  i.e.,  some  form  of  payment  or 
guaranty  before  or  upon  shipment  of  goods ;  Open  Credits,  or 
book  accounts;  Collection  by  Draft  on  customer,  which  may  be 
in  the  nature  of  a  C.O.D.  transaction  or  may  involve  the  exten- 
sion of  credit  on  the  customer's  acceptance. 

CASH  TERMS 

American  cash  terms  are  often  represented  as  unique  and 
typical,  as  has  already  been  remarked  in  these  pages.  This  is  not 
altogether  true.     Let  a  previously  unknown  importer  in  any 


460  PRACTICAL  EXPORTING 

country  write  to  an  English  or  other  European  maniifaeturer 
and  he  will  receive  from  either  very  much  the  same  sort  of  a 
reply  as  he  will  receive  from  an  American.  The  natural  reluc- 
tance of  a  foreign  importer  to  pay  for  his  goods  before  they  have 
been  shipped  is  not  difficult  to  appreciate,  especially  when  more 
than  one  unpleasant  if  not  costly  experience  has  followed  pay- 
ments so  made  in  efforts  to  initiate  business  in  new  lines  which 
he  has  hoped  might  prove  profitable. 

No  less  than  eight  complaints  from  foreign  buyers  have 
reached  the  author's  personal  attention  in  the  course  of  a  single 
month  referring  to  the  non-shipment  or  belated  shipment  of 
goods  for  which  remittances  had  been  made  "cash  with  order." 
Bank  drafts  and  post  office  money  orders  have  actually  been 
filed  away  by  manufacturers  without  attention,  orders  and  re- 
mittances alike  remained  forgotten.  Other  manufacturers  have 
failed  before  shipment  of  goods  on  foreign  orders,  and  their  cus- 
tomers' remittances  have  gone,  with  other  assets,  into  the  hands 
of  receivers.  The  unfortunate  foreigners  may  or  may  not  have 
received  dividends  in  the  course  of  a  year  or  two.  Such  experi- 
ences do  not  encourage  people  abroad  to  remit  money  to  this  or 
any  other  country  in  advance  of  shipment  more  often  than  they 
can  avoid. 

Another  thing  which  we  have  to  bear  in  mind  is  the  extra  cost 
imposed  upon  foreign  buyers  in  arranging  to  send  cash  to  this 
country  or  to  open  credits  here.^  Another  is  the  small  induce- 
ment of  a  cash  discount  in  many  cases.     Usually  an  importer 

1  The  high  cost  to  the  foreign  importer  of  opening  credits  with  banivs  in 
this  country  in  favor  of  American  exporters  must  be  emphasized.  It  is  a 
burden  wliich  sliould  not  be  imposed  upon  importers  of  our  goods  when 
it  is  possil)le  to  avoid  so  doing.  New  Yorl<  or  other  American  credits  are 
no  doiibt  advisable,  even  necessary,  in  a  great  many  instances,  either  in 
normal  times  or  in  times  of  war.  However,  the  mere  fact  that  a  large 
part  of  our  stupendous  war  export  trade  has  been  financed  through  such 
credits  should  not  lead  us  to  expect  that  after  the  return  of  peace  and  the 
resumption  of  international  trade  on  normal  lines,  similar  financing  will  or 
ought  to  continue.  Even  during  the  war  exporters  of  experience  have  not 
required  American  bankers'  credits  on  the  part  of  their  old  and  highly 
desirable  customers  and  certainly  after  the  war,  when  competition  with 
otlier  manufacturing  nations  again  becomes  an  element  very  seriously  to  be 
reckoned  with,  we  shall  have  again  to  extend  to  good  and  responsible  cus- 
tomers facilities  of  payment  such  as  were  extended  before  the  war  and  such 
as  will  certainly  be  offered  to  the  same  houses  by  nations  competing  with 
us  for  their  trade. 


FINANCING  FOREIGN  BUSINESS  461 

buys  and  pays  for  his  goods,  carries  them  in  stock  awaiting  cus- 
tomers, perhaps  for  a  long  time, — vviien  he  finds  them,  extends 
credit  to  them  for  mouths.  If  the  normal  rate  of  interest  in  the 
importer's  country  is  from  10  per  cent,  to  20  per  cent,  per  an- 
num, an  offer  of  2  per  cent,  or  even  5  per  cent,  for  cash  in  the 
United  States  does  not  appeal  to  him  with  any  great  force. 

As  a  principle  in  trading,  many  European  manufacturers  be- 
lieve that  three  months,  or  even  longer  terms  are  preferable 
when  they  can  safely  be  extended,  because  such  terms  bind  im- 
porters to  them  for  future  business.  Forty  or  fifty  years  ago 
even  American  export  commission  houses  used  to  receive  from 
their  foreign  customers  bank  letters  of  credit  to  cover  purchases 
made  by  them.  Competition,  however,  has  developed  to  the 
point  that  in  normal  times  comparatively  little  business  is 
financed  for  the  export  commission  houses  in  this  fashion.  Most 
of  them  are  compelled  to  finance  in  other  ways  in  times  of  peace. 
It  is  to  be  noted,  however,  that  conditions  in  our  export  trade 
differ,  just  as  do  terms  which  American  importers  of  foreign 
goods  enjoy  in  different  commodities.  In  considering  ways  in 
which  foreign  business  is  financed  we  find  several  different  forms 
in  which  cash  or  guaranteed  payments  of  some  sort  may  be  ar- 
ranged. 

Cash  with  Order. — In  the  demand  that  his  foreign  customer 
remit  cash  with  order,  the  American  manufacturer  may  consider 
that  he  has  again  discovered  the  "easy  way."  It  is  so — for  him. 
His  customer  may  send  him  a  draft  on  a  New  York  or  even  on  a 
London  bank,  or  he  may  go  to  his  local  post  office  and  buy  an  in- 
ternational money  order  and  send  any  such  form  of  remittance 
with  his  order  direct  to  the  manufacturer.  But  the  latter,  as 
we  have  noted,  is  quite  unknown  as  a  rule  to  the  foreign  buyer, 
and,  furthermore,  this  is  a  costly  way  of  paying  for  goods,  espe- 
cially when  orders  are  of  considerable  volume  or  frequency.  It 
is  not  necessary  for  his  own  protection  that  the  manufacturer 
make  this  demand  on  his  foreign  prospect.  Indeed,  as  a  rule,  it 
should  be  avoided. 

There  is  a  diplomatic  way  of  proposing  methods  of  pajTnent 
which  safeguard  the  manufacturer  in  every  respect,  as  we  have 
had  occasion  to  remark  in  our  discussion  of  the  conduct  of  for- 
eign correspondence.     The  manufacturer,  without  conveying  the 


462  PRACTICAL  EXPORTING 

slightest  impression  of  suspicion  or  giving  rise  to  m\y  feeling  of 
offense,  may  point  out  to  his  prospect  that  for  any  one  of  a  dozen 
reasons  he  must  require  payment  for  his  goods  upon  their  ship- 
ment from  this  country,  that  both  parties  to  the  transaction  will 
be  amply  secured  if  bank  credits  are  opened  with  responsible 
houses  in  New  York  for  the  payment  of  goods  when  bills  of  lad- 
ing showing  actual  shipment  to  customer  are  presented.  The 
foreign  customer  then  knows  that  his  money  is  held  for  him  by 
a  responsible  banking  house,  the  manufacturer  knows  that  the 
money  is  available  to  Inm  just  as  soon  as  the  goods  have  been  des- 
patched. Of  course,  if  amounts  involved  are  insignificant,  for 
example  only  a  few  dollars  in  payment  for  samples,  then  direct 
remittance  of  cash  is  not  a  risky  proceeding,  and  it  simplifies 
book-keeping  entries,  as  the  prospect  may  be  reminded.  But 
when  fairly  large  sums  of  money  are  involved  then  the  sugges- 
tion of  a  bank  credit  will  invariably  be  found  more  desirable  in 
every  respect  than  an  abrupt  demand  for  "cash  with  order." 

Bank  Credits. — There  are  innumerable  forms  and  variations 
of  foreign  credits  which  may  be  opened  by  importers  in  favor 
of  those  from  whom  they  buy  goods.  Essentially,  however,  such 
credits  simply  require  that  an  importer  in  a  foreign  country  go 
to  his  local  bank  and  arrange  with  it  on  some  mutually  satisfac- 
tory terms  that  it  shall  instruct  those  bankers  with  whom  it  is  in 
correspondence  in  New  York,  or  other  city  of  the  United  States, 
that  the  American  bankers  shall  pay  a  certain  amount  of  money 
to  certain  people  in  the  United  States  on  certain  terms  which  are 
specified.  The  importers  may  or  may  not  be  obliged  to  put  up 
cash  with  their  local  bank.  That  depends  purely  on  their  local 
standing  and  the  facilities  which  are  customarily  extended  to 
them  by  that  bank.^  It  naturally  charges  interest  and  a  certain 
rate  of  commission  for  the  service  extended,  but  such  charges 
compare  favorably  with  the  cost  of  actually  buying  New  York 
funds  and  remitting  to  this  country. 

Confirmed  Bankers'  Credits. — A  "confirmed"  bank  credit 
should  always  be  asked.  This  means  that  the  New  York  bank 
be  instructed  to  advise  the  American  concern  in  whose  favor  the 
credit  is  opened  that  it  has  received  certain  funds  which  will 
be  paid  out  under  specified  conditions.     "When  the  New  York 

1  See  Form  29. 


IJ^ 

Q 

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XTbe  ©persSea  Banfe 

0, J.uly.ae, ig 


To  Tentli  National  Bank,   New  Tork, 
Gentlemen: 

At  the  request  and  for  account  of i:gyp.tleLn..In4ua.trlaa,..IiM 

hereby  authorize  J.ohn..SllU.th..A..Son..of...EuffalQ,..H.l» or  any  other 

parties  whose  drafts  you  may  be  directed  by  .....thfilr. written  order,  or  by  us,  to  ac- 
cept under  this  credit  to  value  on  you  at Bj.it)!.. daya.'...aiglit for  any  sum  or 

sums  not  exceeding  in  all  .-...-..- ..One...XbQUBanii..r...-...-..-..-...-...-..-..r  Pounds  Ster- 
ling (say  .£..iOD.Q.....T-....-  Sterling)  to  he  used  as  ...they. may  direct  for 

invoice  cost  of  -...-..- ..in.sI0ilSlIi<XiSLB...-..r...- ..-...-...- ..-..-...-.  to  be  pur- 
chased for  account  of _ and  to  be  shipped  to 

rCairo.,...Egyp.t» 

'The  Bills  must  be  drawn  in  Bea.Yxjrk _ prior  to  the  first 

day  of  0Q.t.Qbax and  advice  thereof  given  to  you  in  original  and  dupli- 
cate, such  advice  to  be  accompanied  by  Bill  of  Lading  filled  up  to  order  of 

Tlie..O.T-er.T.Sea..Battk..of-Cai.ro('TOiM  copy  of  invoice)  for  the  property  shipped  as 
above.  All  the  Bills  of  Lading  issued,  except  one  sent  to  us  by  the  vessel  carrying  the 
cargo,  and  one  retained  by  the  captain  of  the  said  vessel,  are  to  be  forwarded  direct  to  you. 

Copy  of  invoice  properly  certified  by to  be  forwarded 

to  us  by  the  vessel,  also  advice  of  each  Bill  drawn. 

And  we  hereby  agree  with  the  drawers,  endorsers,  and  bona  fide  holders  of  Bills  drawn 
under  and  in  compliance  with  this  credit,  that  the  same  shall  be  duly  honored  on  presenta- 
tion at  your  office  in  H.ew ...York 

IFe  are,  Gentlemen, 

Your  obedient  servants, 

THE  OVER-SEA  BANK 


1 


by.Lk 


Manage. 

■N.B.     Bills    drawn     under    this    credit 
must  be  marked  Drawn  under  our 

Letter  of  Credit  No.  ...4839 

dated  ..July..36 

,  for  £  ..lOOO. 

Insurance  in  order  at  17.611.. .Yoxk. 


Form  26 — Commercial  Letter  of  Credit. 


o 


FINANCING  FOREIGN  BUSINESS  463 

bank  thus  euiifirms  the  opening  of  a  credit  with  it,  the  American 
sliipper  knows  where  he  stands  and  the  bank  will  be  held  re- 
sponsible for  the  payment  of  the  money,  in  strict  compliance,  of 
course,  with  the  exact  instructions  which  it  has  received  from 
abroad,  which  must  be  met  in  every  detail  by  the  American  ship- 
per. 

If  the  New  York  bank  has  not  been  instructed  to  confirm  such 
a  credit,  it  will  quite  naturally  avoid  assuming  that  responsi- 
bility; Then,  unless  lie  inquires,  the  American  shipper  may  be 
in  doubt  as  to  whether  there  is  any  such  credit  as  his  foreign  cor- 
respondents have  advised  him  would  be  opened.  lie  may,  how- 
ever, ask  the  New  York  bank,  if  he  knows  through  M^hat  bank  his 
customer  proposed  to  open  the  credit,  whether  in  fact  it  has  re- 
ceived suitable  instructions.  The  bank  will  almost  alwaj^s  say 
Yes  or  No.  Some  banks  voluntarily  send  notice  even  of  "un- 
confirmed" credits,  i.e.,  those  which  they  do  not  assume  any  obli- 
gation to  pay.^ 

The  foregoing  terms  and  definitions  may  be  regarded  as  "old 
fashioned"  in  some  respects  because  the  European  War  has 
brought  into  existence  a  set  of  terms  and  certain  procedure 
quite  unknown  before  the  war  and  even  now  unrecognized  by 
some  of  the  older  and  more  conservative  banks  in  New  York, 
who  indeed  profess  to  be  puzzled  by  some  terms  in  common  use 
by  other  banks.  The  most  notable  example  is  the  distinction 
which  some,  but  by  no  means  all,  banks  draw  between  "con- 
firmed" and  "irrevocable"  bankers'  credits.  If  a  credit  is 
"confirmed"  by  a  bank  to  an  American  manufacturer  or  ex- 
porter then  that  bank  is  absolutely  bound  by  such  confirmation. 
Because  of  a  good  deal  of  confusion  arising  in  the  financing  of 
European  purchases  of  munitions  or  other  war  supplies,  often 
amounting  to  hundreds  of  thousands  or  even  millions  of  dollars, 
the  custom  arose  on  the  part  of  some  banks  of  making  a  distinc- 
tion between  a  confirmed  and  an  irrevocable  credit.  The  dis- 
tinction is,  largely  one  of  the  relations  between  foreign  and 
American  banks  and  probably  in  temporary  use  only.  The  dis- 
tinction is  not  interpreted  in  the  same  way  by  all  banks.  It 
chiefly  deserves  consideration  by  the  manufacturer  or  exporter 
because  in  a  confirmed  credit  a  date  is  usually  named  for  its  ex- 

1  See  Form  28. 


464  PRACTICAL  EXPORTING 

piration  while  an  irrevocable  credit  may  sometimes  give  the 
shipper  an  indefinite  or  unlimited  time  in  which  to  present  his 
shipping  documents  to  the  bank.  In  either  confirmed  or  irre- 
vocable credit;  the  American  shipper  in  whose  favor  the  credit 
is  opened  is  sure  to  get  his  money  from  any  reputable  bank,  if 
he  complies  with  the  exact  terms  nominated  in  the  credit. 

Commercial  Letters  of  Credit. — Such  credits  as  we  have  just 
been  discussing  are  commonl}'^  called  cash  credits  because  pay- 
able cash  against  presentation  of  the  shipping  documents.  Time 
credits  are  those  drawn  for  a  longer  period  and  are  usually  cov- 
ered by  commercial  letters  of  credit.^  Both  sorts,  it  should  be 
noted,  are  entirely  different  papers  from  the  ordinary  traveler's 
circular  letter  of  credit,  the  form  in  which  salesmen  and  tourists 
often  carry  their  funds. 

In  essence  an  import  letter  of  credit  is  an  authorization  setting 
forth  the  terms  under  which  the  shipper  of  the  merchandise  may 
draw  a  draft  for  what  he  has  sold.  Sometimes  the  letter  of 
credit  is  addressed  direct  to  the  seller  of  the  goods,  in  which  case 
it  reads :  ' '  You  are  authorized  to  draw  upon  Messrs.  So-and-So, 
bankers  in  {Neiv  York  or  London),  under  the  following  condi- 
tions." Sometimes,  on  the  other  hand,  the  letter  of  credit  will 
be  addressed  directly  to  the  bankers,  in  which  case  it  will  read : 
"You  are  authorized  to  accept  the  drafts  of  Messrs.  So-and-So, 
of  {saij,  Boston  or  Chicago),  under  the  following  conditions." 
There  is  no  difference  in  the  two  kinds  of  credits. 

In  an  ordinary  letter  of  credit  of  this  sort,  the  shipper  is 
simply  given  authority  by  the  bankers  to  draw  and  get  his 
money.  If  the  New  York,  or  other  American  bankers,  however, 
confirm  the  letter  of  credit  to  the  shipper,  the  latter  has  no  fur- 
ther responsibility  nor  can  recourse  be  had  on  him  in  the  event 
of  his  customer  becoming  insolvent.-  That  then  concerns  only 
the  banker  which  has  granted  the  credit.  He  is  secured  by  the 
bill  of  lading  and  other  documents  made  out  to  his  order  which 
accompanied  the  drafts  drawn  under  the  letter  of  credit. 

Commercial  letters  of  credit  are  issued  at  30,  60,  90  days',  4  to 
6  months'  sight,  sometimes  at  other  usage.  A  bank  which  issues 
such  a  letter  of  credit  virtually  agrees  with  the  party  in  whose 

iSee  Form  26. 
2  See  Form  27. 


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//fu/i^f>/      July  30 


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Irrevocable  Kxport  Credit  No.   16731  ICxpiring       Deoenber  1 


H«nry  H.  Flagg,   Inc., 

Cleveland^   Ohio. 

,ar€»fy///y/'5a^Va.e  4  Hornblower, Sydney, NSB  '(M  eixty  days'   eight 
/ei-^«^ii:^/t(A/    not  to  exceed  $650  ■^ 

.eefpeu^n^-'        shlpmenta  of  nerchandlee 


^i/^f/L/frf/f//a  rjJ//fyfi"    |W0^  order  and  ondoraed  in  blank 
o^/ry«T^.>        in  duplicate       vSv' 
•>//fJetU///rr      againatjjiarine  and  war  rieke 
.■6'^/'gi.€^///'fi'u//y'//j»^M//h/       our  aooeptanoe 

,^nf ,f Iff// //////>/ /'f  ///  //'ir//f//y  f/ri'  ^//////i' f/ j rr/ .j/////y///( ff'.J f'///ttJ,JOa/lA~^ 
^M//'///f^J/////j/rU//i'///.y////f/y  //ir  ////M/r^  /■/ f/itJ  Oi'm/A 


^ 


V/r//i'J  /f i //  /ir/f/// 


4^ 


O/f/ff^-f/^^- 


Form  27 — Notice  of  Irrevocable  Credit. 


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Export  Credit  No.  17384 


y^k^^/- 


August  14 
Expiring     November  1 


Henry  Jamee  &  Co., 

Stone  Out,    111b. 

^a^yxH^/i^/^'^^*  Vaoquez  y  Cla.,Sevilla,Spai«^      Sight 

>M4««8W<%!<^      not  to  exceed  $3,000  ^^^ 

yCeypetifW'   shipment  of  one  ttareehing  Dachlne,  ^faglne  and  appurtenances 


-iftaMia;tJJe/^^yife>^   your  order  and  endorsed  in  blank 
tSt.v<ficeJ      in  duplicate        k   \\ 
^^Uuia-n/^e^    marine  and  war  rrrfa 
J^,^e^<^i^vi'f^/f'//J/7^<j^/jt      payment  of  draft 

zMfJM/i'/  fj/(^:^m/  a///a/fMer,  <n/M^ai/na;(^-ff4//iettiiafu/^ce>M't'euJ/nff- 

B  z/^t€ue'tnai/mM^yCiui.i^,^i^iec^'yne'/ftuM^  ^1 


&fv&ta^— 


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<^ 


Form  28 — Banker's  Permission  to  Draw. 

a  bHiflcniion  o(  ibis  son  .  b.ckor  aJvi.iB  lhf.1  li,)  will  proliBbly  I 


« 


T} 


FINANCING  FOREIGN  BUSINESS  465 

favor  it  is  issued,  although  not  always  in  so  many  words,  that  his 
drafts,  drawn  under  and  in  conformity  with  and  within  the 
amount  of  the  credit,  shall  be  duly  honored  on  presentation,  pro- 
vided that  he  complies  with  the  text  of  the  credit.  This  is 
usually  regarded  as  practically  equivalent  to  guaranty  of  pay- 
ment to  the  holder. 

It  is  usually  stipulated  that  the  credit  is  not  to  remain  in  force 
after  a  specified  date,  and  the  firm  accredited  is  requested  to 

state  in  each  draft  "against L/C  No.  "^     These 

letters  of  credit  may  sometimes  refer  to  clean  drafts,  i.e.,  those 
which  need  not  be  accompanied  by  the  documents  against  which 
the  bills  are  drawn.  ]\Iuch  more  frequently,  however,  they  are 
documentary  credits  requiring  that  drafts  drawn  under  them 
be  accompanied  by  a  full  set  of  bills  of  lading,'  with  invoices,  in- 
surance certificates  and  any  other  necessary  papers  in  duplicate. 
Sometimes  a  "marginal  credit"  is  issued  covering  only  a  stated 
percentage  of  the  value  of  shii^nents. 

At  some  large  commercial  and  financial  centers  banks  issue 
credits  directly  to  foreign  shippers  who  are  authorized  to  draw 
on  them  instead  of  on  a  bank  in  the  shippers'  own  country.  An 
English  merchant,  for  example,  may  arrange  with  a  London  bank 
to  issue  a  credit  in  favor  of  an  American  manufacturer  which 
will  provide  that  drafts  shall  be  drawn  directly  against  that 
London  bank  in  liquidation  of  purchases  made  in  the  United 
States  by  the  Englishman.  When  exhibited  to  American  bank- 
ers when  drafts  are  negotiated,  or  when  attached  to  such  drafts, 
these  letters  greatly  facilitate  the  satisfactory  transaction  of  the 
business,  and  sometimes  secure  a  fractional  advantage  in  rates  of 
exchange.  An  authorized  draft  against  a  reputable  bank  or 
banker  is  always  regarded  on  the  most  favorable  basis. 

Familiar  examples  of  the  so-called  letters  of  credit  which  are 
merely  authorizations  to  American  bankers  to  negotiate  certain 
foreign  drafts  are  the  documents  invariably  supplied  by  im- 
porters of  American  goods  in  the  Far  East.-  These  so-called  let- 
ters of  credit  are  nothing  but  authorizations  to  New  York 
bankers  to  purchase  drafts  on  the  customers  in  the  Far-  East 
under  certain  specified  conditions.     The  shippers  are  not  relieved 

1  See  Form  33. 

2  See  Form  30. 


466  PRACTICAL  EXPORTING 

of  responsibility  until  snch  drafts  have  actually  been  paid  by 
their  customers.  But  even  in  such  cases  the  fact  that  a  strong 
banking  house  issues  a  "letter  of  credit"  of  this  sort  is  a  suf- 
ficiently satisfactory  indication  that  the  business  involved  has 
been  examined  by  a  disinterested  third  party  and  found  worthy. 

Partial  Payments  in  Advance. — Manufacturers  or  shippers 
are  often  willing  to  execute  orders  even  from  unknown  foreign 
customers  without  requiring  cash  in  full,  providing  a  partial 
payment  of  the  values  involved  be  made  in  advance  and  an 
agreement  entered  into  to  complete  the  payment  on  some  satis- 
factory terms.  Such  partial  payments  on  account  may  be  pro- 
vided for  in  any  of  the  ways  we  have  just  been  considering.  It 
is,  however,  highly  important  that  manufacturers  offering  such 
terms  to  foreign  prospects  require  something  more  than  mere 
"evidence  of  good  faith."  If  their  prospects  are  not  thor- 
oughly well  known  to  them  as  honorable  and  responsible  con- 
cerns, only  a  small  payment  on  account  may  not  be  sufficient  to 
deter  treacherous  and  tricky  importers  abroad  from  sharp  prac- 
tices which  are  just  as  possible  to  them  under  such  conditions 
as  they  would  be  had  no  payment  whatsoever  been  required  in 
advance.  That  is  to  say,  upon  arrival  of  the  goods  on  which 
only  a  small  payment  had  been  made  importers  of  this  sort  may 
decline  to  pay  the  balance,  whereupon  the  goods  will  go  into 
storage  and  may,  for  any  one  of  many  reasons,  be  sold  locally 
for  a  mere  fraction  of  their  real  value.  The  original  buyer  is 
then  able  to  bid  them  in  at  much  less  than  he  would  otherwise 
have  had  to  pay  for  them. 

There  are  a  great  many  more  expenses  connected  with  the  re- 
turn of  rejected  foreign  goods  than  American  manufacturers 
usually  appreciate.  Any  payment  in  advance  or  deposit  on  ac- 
count should  be  required  to  be  ample  to  cover  all  contingencies 
among  which  are :  ocean  freights  in  both  directions,  remember- 
ing that  return  freights  to  the  United  States  are  morally  certain 
to  be  much  heavier  than  those  paid  on  the  outward  journey. 
Consular  invoices  have  to  be  secured  for  the  return  of  Ameri- 
can goods.  They  cost  something  and  involve  the  employment 
of  some  kind  of  an  agent,  and  a  fee,  at  the  other  end  of  the  line. 
There  are  almost  certain  to  be  quay  dues,  landing  charges, 
storage  expenses  to  be  paid  abroad  before  the  goods  can  be  re- 


I 


o 


Manila,  ..ila.]l..lS /p/.. 

an  and  Asiatic  Bank: 

Jianila 


In  crjnsideration  of  your  Bank  al  lIe»..York. negotiating  the  DIP 

Draft,  or  Draft!,  at  SOdays  after  sight,  drawn  or  endorsed  by  -.J.olm..Sini.th..i..S.OI1...0f... 
Bu££alO,lI.Z.<>n  ?5L  for  any  sum  or  sums  not  exceeding  -...tllxee..th.QUaalui..dQllarH 

^hereby  agree  duly  to  accept  the  same  on  presentation,  and  pay  the  amount  thereof 

at  maturity,  provided  such  Draft  or  Drafts  shall  be  negotiated  liithin  aix months 

from  this  date. 

fVith  interest  added  at  ..fllx..  per  cent,  per  annum  from  date  of  bill  to  ap- 
proximate date  of  receipt  of  remittance  in  Hew.. .York at  your  rale  for  Bank  Demand 

Drafts  on  ...Hew...Yor.k... 

At  the  lime  negotiating  the  above  Drafts,  the  shippers  will  hand  over  to  your 
bank,  in  hypothecation,  as  collateral  security  to  you  for  the  due  acceptance  and  payment 

thereof,  /n^o.V.-, '^tT"'^"'"  °^  ""'g'"  BUls  of  Lading,  and  Policy  of  Marine  Insurance,  in- 
eluding  war  risk,  for  merchandise,  and— agree  that,  in  case  of  need,  you  shall  he  at  lib- 
erty to  sell  the  said  merchandise,  and  apply  the  net  proceeds  (after  deducting  freight  and 
insurance  if  effected  by  you.  and  all  charges  together  with  the  usual  Merchants  Commission 
which  you  are  to  be  entitled  to)  towards  payment  of  the  said  Drafts  without  prejudice  to  your 

recourse  thereon  against and  all  other  parties  for  any  deficit.     The  word  "proceeds"  is  to 

be  understood  to  include  the  amount  recoverable  under  any  insurance  policies  covering  the 
said  merchandise. 

It  is  further  agreed  that  you  are  not  to  be  responsible  for  any  loss  or  damage 
'which  may  happen  to  said  merchandise,  either  during  its  transit  by  sea  or  by  land,  or  after 
its  arrival,  or  by  ant  reason  of  the  non-insurance  thereof,  nor  for  any  deficiency  in  the 
quality  or  value,  nor  for  any  incorrect  representation  of  the  quality  or  value  thereof,  nor  for 
the  stoppage  or  detention  thereof  by  the  shipper,  or  any  other  person  whomsoever,  and  inas- 
much as  the  above  stipulation  for  handing  you  bills  of  lading  is  intended  for  your  security, — ■ 

agree  to  be  liable  as  aforesaid  on  the  negotiation  of  such  Drafts  with  your  bank  whether 
the  bill  or  bills  of  lading  be  or  be  not  of  sufficient  value  to  cover  any  advances  made  by  you 

on  negotiating  such  Drafts;  and.  further,  in  case  of'"!^  accepting  such  Drafts  condition- 
ally or  your  handing  over  the  aforesaid  documents  to  »■""*  undertake  to  pay  the  said 
Drafts  al  maturity,  on  performance  of  such  condition,  and —  authorize  you  to  make  such 

agreements  as  you  think  proper  with  the  aforesaid  drawers  ^^  endorsers,  touching  the  dis- 
position of  such  bills  of  lading  or  the  proceeds  thereof,  or  of  any  goods  consigned  thereby. 

Il  is  further  agreed  that  the  negotiation  of  the  Draft  or  Drafts  above  re- 
ferred to  shall  he  optional  on  the  part  of  your  Bank.   ^-»         ^  ^^ 


Tru 

Copy 

The 

Ameg 

n  and  Asiatic  Bank 
.t\^3::^^^..Agent  &  Manager. 

Form  29 — Importer's  Guaranty  to  Bankers. 


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HONGKONG  a  Shanghai  Banking  Corporation 

NEW    YORK ^OU.a,  £     -  '9 

.z>t.(f.aZ-.-^---- 

Dear  Sir/s. 

1   beg  lo  inform  you  that  I  am  instructed   by  the  Manager  of  our 

Branch  at  y^W^^n-O^tVA-  -  —  i  ' ' ^•"'°  P"''<=hase^s  offered, 

your    ^i/fTfu'yt-vl^l^^l/U^  ^'i\'i  A^^^^^^ 

. — —         Jf         '  rio  the  extent  of 

Ijo^-if-a), - 

fot      _ .      Invoice  cost  of /--^/i.^'E/C.^C^U^^Jli^^ 

— ' : shipped  to  thai  port. 

The  Bills  must  be  accompanied  by  full  sets  of  Bills  of  Lading,  made  out 
to  "Order,"  blank  endorsed  and  marked  by  the  Shipping  Company  "freight  paid," 
together  with  Invoices  and  Policies  of  Insurance,  all  duly  hypothecated  to  the 
Bank  against  payment  of  the  Bills. 

Please  note  that  this  is  not  to  be  considered  as  being  a  Bank  Credit 
and  does  not  relieve  you  from  tlie  liability  usually  attaching  to  the  Drawer  of  a 
Bill  of  Exchange  also  that  although  it  is  considered  to  be  open  for  ("Q^i^, 

months  from  JJ^jIjlI it  maybe  cancelled  by  us  upon  givmgyou 

notice.  (/  v 

Bills  drawn  under  the  above-mentioned  inslruclions  must  be  plainly 
marked  "Drawn  under   •UiiJ-U^/  Letterof  Authorily  No.  t?(»»f(f  " 

and  must  be  accompanigjl  by  this  letter  in  order  that  the  amount  of  same  may 
be  endorsed  on  the  back  hereof. 


i  faithfully. 


.«P 


<^ 


^"^ 


Form  30 — Banker's  Authority  to  Draw. 


Agent. 


FINANCING  FOREIGN  BUSINESS  467 

turned.  There  are  charges  for  protesting  of  draft,  charges  for 
entering  goods  at  United  States  custom  houses  when  they  arrive 
Jiere,  and  the  employment  of  American  custom  house  brokers,  in 
addition  to  marine,  fire  and  possibly  war  risk  insurance  while 
goods  are  in  storage  no  less  than  while  they  are  afloat.  Such 
expenses  mount  up  very  rapidly  and  their  aggregate  is  quite 
sure  to  astound  the  inexperienced  shipper. 

A  partial  if  not  total  payment  in  advance  is  the  practically 
invariable  custom  of  manufacturers  of  special  machinery  or 
other  products  which  have  to  be  made  according  to  buyers'  re- 
(luirements  and  are  not  generally  marketable.  In  such  eases 
advance  pa3'ments  on  account  are  required  when  the  order  is 
placed,  not  merely  upon  shipment  of  the  goods.  This  again  is 
not  purely  an  American  practice.  It  is  customary  among  manu- 
facturers of  Europe  as  well  under  such  circumstances,  and  even 
as  applying  to  the  biggest  and  richest  houses  in  the  world  and 
contracts  made  by  Governments  of  undoubted  credit.  It  is  a 
legitimate  business  precaution  which  should  not  be  overlooked. 
This  refers,  it  should  be  noted,  to  the  manufacturer  of  special 
goods  and  not  to  the  shipper  of  staple  articles  or  goods  in  regu- 
lar commerce. 

OPEN  CREDITS  TO  FOREIGN  COUNTRIES 

Doubtless  most  men  begin  their  export  trading  by  acknowl- 
edging the  truism — "there  are  just  as  big,  sound  and  honorable 
business  houses  in  other  countries  as  in  our  own."  Even  when 
this  acknowledgment  is  made,  a  manufacturer's  disposition  to 
demand  ''cash  with  order"  is  not  modified  in  some  cases.  In 
others,  too  many  chances  are  taken,  too  little  allowance  made 
for  differences  of  blood  and  environment. 

We  hear  a  good  deal  of  eloquence  from  the  platform  on  the 
high  sense  of  honor,  the  fine  and  delicate  sensibilities  of  mer- 
chants in  other  lands,  very  particularly  in  Latin  America.  All 
may  be  true,  doubtless,  but  any  business  experience  of  breadth 
or  length  is  not  likely  to  increase  an  exporter's  confidence  in 
relying  upon  the  qualities  extolled.  Early  in  their  experience 
as  a  colonizing  power  in  China,  the  Germans  extended  credits 
right  and  left.  Ultimate  results  were  disastrous,  even  the  Ger- 
man Government  in  thoroughly  characteristic  fashion  was  called 


468  PRACTICAL  EXPORTING 

to  the  aid  of  the  merchants  in  an  effort  to  bring  pressure  to  bear 
on  the  Chinese  Government  to  compel  payments  to  Germans  by 
Chinese  debtors. 

So  good  an  authority  as  John  F.  Fowler,  in  charge  of  the 
merchandizing  interests  of  W,  R.  Grace  &  Co.,  of  New  York, 
who  rank  as  the  largest  merchant  house  on  the  West  Coast  of 
South  America,  has  used  the  following  language:  "Casual 
visitors,  also  self -constituted  authorities,  and  even  'official'  in- 
vestigators, may  report  the  foreign  customer  generally  as  ex- 
ceptionally high  in  commercial  morality  and  rarely  a  defaulter 
in  his  payments !  Oh !  The  contrast  in  really  commercial  ex- 
perience! Writers  of  such  misleading  articles  justly  deserve 
rebuke. ' ' 

No  doubt  business  can  be  and  is  done  with  some  reputable, 
high  class  merchants  in  other  countries  in  the  same  way,  or  in 
much  the  same  way,  and  with  at  least  equal  safety,  as  here  at 
home,  but  if  such  business  involves  open  credits  of  the  sort  that 
we  give  to  our  customers  in  the  United  States,  then  the  manu- 
facturer must  have  his  own  branch  office  on  the  ground,  or  must 
have  a  suitably  qualified  agent  there,  unless  he  is  making  such 
unusual  and  exorbitant  profits  on  his  goods  that  he  can  afford 
to  "take  chances"  with  his  eyes  open.  Otherwise,  losses,  annoy- 
ing if  not  disquieting  to  the  average  exporter,  are  bound  to 
occur.  When  we  talk  of  export  trade  being  the  safest  in  the 
world,  of  the  trifling  losses  experienced  during  years  of  busi- 
ness, we  refer  only  to  business  on  conservative,  sound  lines, 
meaning  in  general  the  established  basis  of  most  oversea  trade 
— the  documentary  draft  which  we  shall  proceed  to  study  in  the 
course  of  a  few  pages.  We  do  not  mean  general  or  frequent  ex- 
tension of  open  credits  to  customers  abroad. 

What  Is  Meant  by  "Open  Credit." — The  open  credits  now 
in  question  we  may  define  as  the  usual  book  accounts  which 
characterize  the  great  bulk  of  domestic  business.  Merely  ship- 
ping goods,  sending  an  invoice,  making  a  charge  on  the  books 
and  trusting  to  customers'  honor  or  financial  abilities  to  pay 
within  a  specified  length  of  time  is  frequent  enough  within  the 
borders  of  any  country.  It  characterizes  trade  throughout 
Europe  where,  as  we  long  ago  remarked,  trade  between  close 
lying  nations  ditt'ers  but  little  from  trade  between  two  of  our 


FINANCING  FOREIGN  BUSINESS  469 

own  adjoining  States.  German  niannfacturers.  do  not  regard 
trade  with  Switzerland  or  with  Holland  as  "export  trade." 
Excepting  in  certain  branches  of  industry,  business  throughout 
the  Continent  of  Europe  is  handled  by  European  manufacturers 
in  a  general  way  very  much  as  we  handle  our  trade  within  the 
United  States. 

When,  however,  German,  French  or  any  other  European 
merchants  ship  oversea,  then  an  entirely  different  set  of  condi- 
tions is  encountered  and  quite  another  procedure  adopted. 
American  manufacturers  in  selling  their  goods  in  Europe  often 
run  counter  to  the  experiences  and  practices  of  their  European 
prospects  who  have  not  been  accustomed  to  import  goods  from 
oversea  and  strenuously  object  to  meeting  the  terms  which 
usually  and  properly  rule  in  oversea  trade.  They  may  demand 
that  the  American  who  wants  to  sell  them  goods  shall  do  busi- 
ness with  them  on  the  basis  to  which  they  are  accustomed  in 
dealing  with  their  usual  European  suppliers. 

It  is  not  only  in  Europe  that  demands  for  open  credit  some- 
times come  to  American  manufacturers.  The  practice  of  de- 
manding such  terms  has  been  frequent  among  buyers  in  Mexico, 
in  Cuba  and  the  West  Indies.  In  these  other  territories,  how- 
ever, it  is  not  by  any  means  so  strenuous  as  a  rule  as  is  the  de- 
mand from  European  buyers.  A  diplomatic  argument  is  usually 
likely  to  result  in  an  agreement  to  terms  of  ninety-day  drafts, 
or  something  of  that  sort,  instead  of  the  open  credit  demanded. 
A  certain  amount  of  trade  with  the  British  West  Indies  is  car- 
ried on  by  export  commission  houses  on  open  credit  terms,  the 
understanding  usually  being  that  remittances  shall  be  made  by 
return  of  the  sleamer  which  takes  out  the  goods,  an  understand- 
ing as  often  notable  in  its  breach  as  in  its  observance.  Simi- 
larly, a  good  deal  of  the  business  of  export  commission  houses 
with  Central  America,  in  fact,  with  all  of  the  Caribbean  coun- 
tries, is  on  an  open  credit  basis  because  so  much  of  it  consists 
in  an  exchange  of  imports  and  exports. 

Americans  have  sometimes  been  charged  with  being  re- 
sponsible for  spoiling  these  near-by  markets,  particularly  Mexico 
and  Cuba.  They  have  been  accused  of  having  attacked  these 
near  neighbors  in  ignorance  of  established  export  trade  prac- 
tices, of  having  been  so  anxious  to  get  business,  so  fearful  of 


470  PRACTICAL  EXPORTING 

competition,  so  eagerly  fighting  each  other,  especially  in  Cuba 
after  the  Spanish-American  War,  that  they  willingly  oifered 
extravagant  and  quite  unnecessarily  generous  terms.  Of  late, 
a  change  for  the  better  in  both  of  these  markets  has  been  noted 
and  tJie  disposition  of  manufacturers  entering  them  should  be  to 
hold  their  customers  to  terms  just  referred  to  as  usual  in  over- 
sea business. 

Open  Credits  as  Affected  by  Organization  of  Foreign  Busi- 
ness.— When  a  foreign  shipper  attempts  to  do  business  on  open 
account  terms  with  a  customer  in  another  country  he  is  likely 
immediately  to  encounter  many  local  customs  which  are  unusual 
to  him  and  which  may  seriously  interfere  with  the  satisfactory 
and  regular  conduct  of  his  business,  especially  with  the  receipt 
of  remittances  in  anticipated  time.  For  example,  in  some  coun- 
tries it  is  customary  to  pay  bills  on  certain  days  of  the  month ; 
in  some,  collection  by  ordinary  draft  when  credit  term  has  ex- 
pired is  common — in  others,  this  course  is  virtually  unknown. 
Without  necessarily  implying  any  lower  ideals  of  commercial 
honor  in  the  business  communities  of  other  countries,  yet  it  is  to 
be  remarked  that  indebtedness  to  a  distant  foreign  creditor,  when 
merely  in  the  form  of  an  open  account,  is  far  more  likely  to  be 
neglected  or  abused  by  the  average  trader  than  would  be  similar 
accounts  owing  to  local  or  neighboring  suppliers  by  whom  pres- 
sure may  be  more  promptly,  more  severely  and  more  effectively 
exerted — with  whom  excuses  are  of  less  avail. 

Customers'  Objections  to  Drafts. — Objections  frequently 
made  by  foreign  customers  to  purchasing  goods  subject  to  pay- 
ment or  acceptance  of  draft  attached  to  documents,  may  be 
based  either  on  their  unfamiliarity  with  this  form  of  business 
or  on  the  claim  that  such  terms  are  a  reflection  on  their  stand- 
ing and  character.  Or  they  may  be  based  on  the  fact  that  by 
the  acceptance  of  a  draft  they  are  legally  compelled  to  pay  at  a 
certain  time,  whether  convenient  or  not,  while  conditions  of 
trade,  of  the  crops,  or  of  the  foreign  exchange  market  might 
make  such  definite  payment  inconvenient. 

The  American  salesman  who  personally  encounters  such  ob- 
jections in  the  course  of  his  effort  to  negotiate  a  sale,  may  easily 
enough  convince  his  prospect  of  the  reasonableness  of  his  re- 
quirement for  draft  terms,  if  he  is  thoroughly  well  acquainted 


FINANCING  FOREIGN  BUSINESS  471 

with  international  business.  He  may  point  to  the  invariable 
practice  of  all  shippers  in  oversea  trade.  He  may  emphasize  the 
lo\^  prices  which  he  has  named  which  are  only  available  in 
case  his  house  can,  through  the  sale  of  a  draft,  obtain  prompt 
cash.  He  can  explain  how  it  is  possible  to  extend  drafts  and  as- 
sure the  prospective  customer  of  the  willingness  of  his  principals 
to  offer  every  facility  to  him. 

When  this  question  is  one  which  has  to  be  arranged  by  letter, 
a  little  thought  and  study  are  required,  although  very  much  the 
same  arguments  are  to  be  brought  into  pla}^  The  letter  must  be 
made  effective  and  convincing. 

When  Open  Accounts  May  be  Accepted. — Now  and  then 
manufacturers  will  be  found  who  declare  that  their  experience 
in  extending  direct  open  accounts  to  foreign  customers  has  been 
uniformly,  or  on  the  w^hole,  satisfactory.  Much  more  frequently 
results  of  such  accounts  have  been  unpleasant  in  the  extreme,  if 
not  costly.  The  supplier,  thousands  of  miles  away,  is  in  the 
worst  possible  position  to  ask,  to  say  nothing  of  enforcing  prompt 
settlements.  He  is  invariably  subject  to  exasperating  and  to 
him  inexplicable  delaj^s,  usually  accompanied  by  claims  of  one 
sort  or  another. 

There  is  really  but  one  way  in  w^hich  general  business  of  con- 
siderable volume  can  be  satisfactorily  conducted  on  open  ac- 
count terms  in  foreign  markets.  That  is,  through  the  strict 
supervision  of  such  accounts  by  a  resident  representative  of  the 
manufacturer.  In  our  discussion  of  features  involved  in  doing 
business  through  local  commission  agents  we  have  alread}^  noted 
the  advantage  which  such  agents  may  be  to  their  foreign  prin- 
cipals in  the  way  of  promptly  and  diplomatically  adjusting 
troubles  that  are  apt  to  arise  in  any  business.  Those  observa- 
tions may  well  be  reviewed  at  this  point. 

Few  American  manufacturers  understand  the  extent  to  which 
local  commission  agents  are  sometimes  relied  upon  by  European 
houses  whom  they  represent.  A  certain  well  known  firm  of  com- 
mission agents  in  South  Africa  represents  half  a  dozen  Ameri- 
can manufacturers  of  hardware.  As  salesmen  and  introducers 
of  these  hardware  lines  the  services  of  this  firm  are  highly  re- 
garded by  their  American  principals.  However,  this  branch  of 
the  business  of  the  South  African  concern  in  question  is  only  a 


472  PRACTICAL  EXPORTING 

side  issue  with  it.  The  firm 's  chief  business  is  the  oversight  and 
regulation  of  loans  extended  to  South  African  importers  by  a 
big  British  merchant,  whose  representatives  these  South  African 
commission  agents  also  are.  They  determine -whether  one  im- 
porter's credit  shall  be  cut  down  from  £10,000  to  £5,000,  whether 
another's  shall  be  increased  from  £1,000  to  £2,000,  and  so  on. 
Their  judgment,  based  on  their  experience  and  backed  by  all  the 
information  they  are  able  to  gather,  is  accepted  by  the  London 
merchant  as  the  basis  on  which  he  will  risk  something  like 
$250,000.  When  able,  experienced,  reliable  agents  of  such  a 
class  are  to  be  secured,  then  business  in  their  markets  may  be 
safely  done  on  any  terms  usual  in  such  markets  of  which  the 
agents  approve.  In  the  absence  of  similar  representatives 
permanently  located  in  the  market,  open  credit  terms  such  as  we 
are  now  discussing  ought  never  to  be  extended — unless  ex- 
porters are  fully  prepared  to  risk  and  accept  gracefully  actual 
losses  as  well  as  frequent  disputes. 

FOREIGN  BILLS  OF  EXCHANGE 

Drafts  drawn  against  foreign  bankers  or  merchants  are  often 
referred  to  as  bills  of  exchange.  Absurd  as  it  may  seem,  expe- 
rience has  taught  that  American  manufacturers  who  are  not 
familiar  with  international  trading  are  quite  sure  to  confound 
such  drafts  with  the  domestic  devices  of  their  collection  depart- 
ment in  trying  to  secure  payment  from  delinquent  debtors. 
Notifying  such  a  debtor  that  unless  his  account  is  paid  by  the 
fifteenth  proximo  "we  shall  draw"  a  draft  on  you"  seems  to  be  a 
favorite  American  practice  not  so  generally  employed  in  other 
countries  and  usually  regarded  as  of  little  ef^cacy  here  at  home. 
Drafts  so  drawn  bear  not  the  remotest  relation  to  drafts  known 
as  bills  of  exchange  in  foreign  trading. 

The  imports  and  exports  of  all  countries  of  the  world  are 
virtually  in  toto  financed  by  means  of  these  bills  of  exchange,  as 
they  have  been  for  a  hundred  years  and  more.  Whether  these 
foreign  bills  of  exchange  are  drawn  under  commercial  letters  of 
credit  or  whether  they  are  simply  drawn  at  shipper's  risk  and 
sent  abroad  to  foreign  bankers  for  collection  from  customers 
does  not  afiPect  the  character  of  the  drafts.  They  may  be 
"clean"   bills,  that  is,   a  draft  unaccompanied  by   any   other 


FINANCING  FOREIGN  BUSINESS  473 

papers.  Possibly  even  a  clean  bill  when  used  in  international 
banking  carries  a  trifle  more  weight  with  it,  because  of  its  un- 
usualness,  than  does  such  a  draft  in  this  country.  When,  how- 
ever, foreign  bills  of  exchange  are  discussed  in  connection  with 
commerce,  what  is  called  the  "documentary  draft"  is  almost 
always  referred  to. 

The  "documentary  draft"  is  adopted  in  order  to  safeguard 
the  interests  of  shippers.  It  ensures  that  delivery  of  a  ship- 
ment to  consignee  will  only  be  made  after  terms  of  the  shipper 
have  been  met.  Bills  of  lading  drawn  to  the  shipper's  order 
are  the  chief  "documents"  which  give  these  drafts  their  name. 
By  attaching  such  bills  of  lading  to  a  draft  and  presenting  all 
to  consignee  through  a  responsible  third  party  (almost  always  a 
banker)  the  shipper  makes  certain  that  his  draft,  i.e.,  his  terms 
of  sale,  will  be  satisfied  before  he  parts  with  his  goods.  The 
third  parties  handling  the  draft  and  documents  as  agents  for 
the  shipper  will  not  otherwise  surrender  the  bills  of  lading  whose 
possession  gives  title  to  the  goods  they  represent. 

Perhaps  a  further  distinction  should  be  emphasized.  A  mer- 
chant in  Buffalo  speaks  of  buying  a  "draft  on  New  York"  for 
remittance  to  the  latter  city  in  payment  of  indebtedness  there. 
A  New  York  importer  buys  a  "draft  on  London"  to  forward  to 
some  supplier  of  goods  abroad  in  payment  of  an  account.  These 
are  bankers'  drafts  or  checks,  and  are  accepted  as  the  equivalent 
of  so  much  cash  because  confidence  is  reposed  in  the  standing 
of  the  banker  issuing  the  drafts  and  his  credit  if  not  his  cash 
balance  with  his  correspondent  bank  on  which  the  draft  is 
drawn.  A  merchant's  bill  of  exchange  does  not  necessarily 
imply  anything  of  this  sort.  By  itself  unaccompanied,  that  is, 
a  "clean  bill,"  it  has  no  value  whatsoever  apart  from  the  signa- 
ture of  its  maker. 

Bankers  who  issue  the  drafts  which  are  accepted  as  cash  main- 
tain deposits  or  carry  accounts  in  the  foreign  banks  on  which 
they  draw  drafts.  In  somewhat  similar  fashion  a  merchant  who 
ships  goods  and  draws  a  draft  on  his  customer  requiring  the 
latter  to  pay  certain  sums  of  money, "  may  accompany  those 
drafts  by  valuable  securities.  He  may  attach  to  them  an  in- 
voice for  goods  shipped,  the  bills  of  lading  so  drawn  as  to  con- 
vey the  ownership  of  the  goods  and  a  certificate  of  marine  insur- 


474  PRACTICAL  EXPORTING 

ance  indemnifying  its  holder  against  possible  damage  or  loss  in 
transit,  the  whole  papers  completing  a  transaction  which  on  its 
face  is  proven  to  be  legitimate.  Merchandise  drafts,  or  bills  of 
exchange,  accompanied  by  these  papers  are  called  "documen- 
tary drafts."  How  different  they  are  from  "clean"  drafts  be- 
comes evident;  they  may  and  usually  do  form  the  basis  for  an 
advance  of  money  by  bankers  or  others.  Since  at  least  nine- 
tenths  of  the  international  trade  of  the  world  is  now  and  has 
for  many  years  been  conducted  on  this  basis,  additional  se- 
curity has  developed  from  custom  and  importers  the  world  over 
are  exceedingly  jealous  in  protecting  their  names  in  such  trans- 
actions. 

What  Are  Foreign  Drafts? — The  definition  of  a  bill  of  ex- 
change as  given  in  the  English  Bills  of  Exchange  Act  in  1882 
is  "an  unconditional  order  in  writing  addressed  by  one  person 
to  another,  signed  by  the  person  giving  it  and  requiring  the 
person  to  whom  it  is  addressed  to  pay  on  demand  or  at  a  fixed  or 
determinable  future  time  a  sum  certain  in  money  to  or  to  the 
order  of  a  specific  person  or  bearer." 

All  over  this  country  and  all  over  every  other  country  there 
are  exporters  of  merchandise  who  are  shipping  goods  and  draw- 
ing drafts  against  their  customers  in  foreign  lands.  All  over 
this  country  and  all  over  every  other  country  there  are  im- 
porters who  have  bought  merchandise  abroad  and  who  need  bills 
of  exchange  to  pay  for  their  purchases.  If  an  exporter  of  cotton 
in  New  York  and  an  importer  of  champagne  in  the  same  city 
know  each  other  and  have  business  relations  together,  it  might 
be  a  comparatively  simple  thing  for  one  to  balance  his  account 
against  the  other,  the  importer  of  champagne  paying  the  ex- 
porter of  cotton  and  the  foreign  shipper  of  the  champagne  col- 
lecting from  the  foreign  importer  of  the  American  cotton. 
That  there  are  obstacles  in  the  way  of  the  successful  termina- 
tion of  international  business  affairs  in  so  simple  a  fashion  is 
obvious.  The  exporter  of  cotton  wishes  his  pay  in  dollars.  The 
shipper  of  champagne  in  France  requires  his  in  francs.  He 
therefore  must  draw  a  draft  or  bill  of  exchange  against  his 
debtor,  unless  he  has  required  that  debtor  to  place  the  actual 
cash  in  his  hands  before  the  goods  have  been  shipped.  This,  as 
has  been  indicated,  is  the  exceptional  not  the  usual  practice  in 


FINANCING  FOREIGN  BUSINESS  475 

times  of  peace — at  least  has  been  in  the  past  and  undoubtedly 
will  in  the  future  continue  to  be. 

Because  both  the  shipper  of  the  cotton  and  the  shipper  of  the 
champagne  wish  to  be  quite  certain  of  receiving  payment  for 
their  shipments  and  because  they  may  not  wish  to  be  out  of 
their  funds  for  a  considerable  length  of  time  and  therefore  want 
to  raise  money  from  bankers,  they  accompany  the  bills  of  ex- 
change which  they  draw  with  the  shipping  documents,  as  we 
have  already  noted.  Foreign  commercial  bills  of  exchange  may 
therefore  be  said  to  be  almost  invariably  accompanied  by  ship- 
ping documents.     They  are  not  simply  demands  to  pay.^ 

How  Foreign  Drafts  Are  Drawn. — Foreign  drafts  are  always 
drawn  in  duplicate,  known  as  First  of  Exchange  and  Second  of 
Exchange,  one  becoming  void  when  the  other  has  been  duly 
satisfied.-  This  is  in  accordance  with  the  general  practice  of 
seeking  safety  in  the  transmission  of  valuable  documents  to 
oversea  destinations  through  forwarding  one  set  by  one  mail  or 
steamer,  and  duplicates  by  a  succeeding  mail  or  another  vessel.^ 
They  are  seldom  drawn  direct  to  the  order  of  a  specific  payee, 
that  is,  instead  of  writing  "Pay  to  the  order  of  J'he  First  Na- 
tional Bank"  (or,  The  Anglo-South  American  Bank)  or  some- 
thing of  that  sort,  they  are  drawn  to  read  "Pay  to  the  order  of 
ourselves."  This  gives  greater  flexibility  in  their  handling,  for 
such  bills,  when  endorsed  in  blank  by  the  drawers,  become  bearer 
instruments  and  can  be  utilized  at  discretion  by  the  parties  in 
whose  hands  they  are  placed. 

However,  w^hen  such  drafts  are  forwarded  direct  by  shippers 
of  the  United  States  to  given  bankers  at  foreign  points  (usually 
for  collection  only)  then  they  may  either  be  drawn  payable 
directly  to  the  name  of  the  bankers  to  whom  they  are  forwarded 
or  may  be  specifically  endorsed  to  such  bankers.*  It  will  be 
understood,  of  course,  that  drawing  a  draft  to  one's  owfi  order 
and  endorsing  it  in  blank  is  a  procedure  not  to  be  risked  unless 
the  document  in  question  is  passed  immediately  by  the  drawers 

1  Adapted  from  Franklin  Esclior  in  American  Exporter. 

2  See  Form  31. 

3  The  old  custom  of  drawing  in  triplicate  is  sometimes  required  by 
bankers  in  times  of  war  or  unusual  risk  of  interruption  or  loss  to  trans- 
oceanic mails. 

4  See  Form  32. 


476  PRACTICAL  EXPORTING 

to  responsible  bankers  to  whose  care  such  a  bearer  document  can 
be  trusted.  Most  foreign  drafts  are  so  transferred  directly  to 
bankers  in  this  country  and  are,  therefore,  usually  endorsed  in 
blank.  Shippers  must  never  lose  sight  of  the  fact  that  these 
drafts  when  accompanied  by  properly  endorsed  order  bills  of 
lading,  etc.,  represent  actual  property  and  must  be  treated  with 
care  and  respect. 

It  may  be  noted  in  this  connection  that  drafts  drawn  by  busi- 
ness houses  against  their  own  branches  in  foreign  countries  are 
not  generally  approved  of  by  foreign  exchange  bankers,  are  re- 
garded as  in  an  entirely  different  category  from  ordinary  mer- 
chandise drafts  on  non-related  -customers  which  on  their  face 
seem  to  indicate  legitimate  transactions  in  the  regular  course  of 
trade. 

Every  draft,  to  be  utilized,  must  be  endorsed  by  its  drawer,  if 
made  payable  to  his  own  order.  Without  such  endorsement  it  is 
valueless  to  any  one  else. 

Sight  Drafts. — Foreign  drafts  may  be  drawn  payable  at 
sight  or  at  a  given  time  after  sight  or,  less  usually,  after  date.^ 
A  bill  drawn  at  sight  must,  theoretically,  be  presented  by 
bankers  at  address  immediately  upon  its  receipt  and  then  and 
there  promptly  paid.  As  a  matter  of  fact  local  customs  in  a 
great  many  markets  modify  practices  of  bankers  in  this  regard. 
Customs  are  too  firmly  established  to  be  easily  uprooted  in 
numerous  countries  of  holding  even  sight  drafts  until  the  ar- 
rival of  goods,  sometimes  until  long  thereafter.-  This  is  a  con- 
sideration, however,  which  does  not  usually  concern  shippers 
but  is  taken  into  consideration  by  bankers  in  naming  rates  of 
exchange  or  in  purchasing  such  drafts,  when  allowance  is  made 
for  probable  interest  charges.  It  may,  however,  directly  affect 
returns  to  shippers  when  drafts  are  sent  forward  for  collection 
only. 

In  order  to  provide  consignees  with  ample  notice  for  the 
payment  of  nominal  sight  drafts  drawn  against  them  in  markets 
where  the  foregoing  is  not  the  usual  custom,  as  for  example  in 

1  Drafts  drawn  paya])le  "after  arrival"  are  to  be  avoided.  Many  bank- 
ers refuse  to  liandle  them. 

2  In  Holland  it  is  i]l('<,'al  to  present  a  draft  initil  bankers  have  in  their 
possession  duplicate  and  a  "full  set"  of  all  documents. 


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Form  31— Simple  Sight  Draft. 


^ 


FINANCING  FOREIGN  BUSINESS  477 

Great  Britain,  such  drafts  are  sometimes  drawn  payable  three 
days,  seven  days,  or  perhaps  ten  days  after  sight. 

Time  Drafts. — Time  drafts  may  be  drawn  at  seven,  ten,  thirty, 
sixty,  ninety  days,  or  sometimes  at  one  month,  three  months, 
four  months  or  even  six  months  "after  sight."  ^  Sometimes 
they  may  be  drawn  at  similar  periods  "after  date,"  and  so 
doing  would  embody  some  desirable  improvements  in  the 
handling  of  time  bills,  but  the  custom  of  drawing  "after  sight" 
instead  of  "after  date"  is  the  general  and  well  established  one 
and,  therefore,  at  present  usually  preferable. 

"After  sight"  means,  of  course,  the  period  of  time  named 
after  the  bill  has  been  presented  to  drawee.  Bankers  in  negoti- 
ating such  bills  have  therefore  to  take  into  consideration  in- 
terest for  the  running  time  of  the  bill  itself  after  sight  in  addi- 
tion to  the  probable  or  usual  time  occupied  in  transit  by  mail 
to  and  from  point  on  which  drawn.  Mere  exhibition  of  a  draft 
to  the  drawee  is  not  enough  to  establish  "sight."  Legal  .evi- 
dence of  the  fact  is  indicated  by  notation  of  the  actual  date 
when  presented,  thus  starting  the  running  term  of  the  docu- 
ment, coupled  usually  with  the  signature  of  drawees. 

Foreign  bills  of  exchange  are  usually  drawn  a  certain  number 
of  days,  say  thirty  days  or  ninety  days  after  sight,  instead  of  at 
one  month's  or  three  months'  sight.  Greater  exactness  and  less 
liability  to  confusion  on  account  of  possible  variation  in  local 
laws  is  thus  secured.  In  principle,  however,  the  word  "month" 
in  a  bill  of  exchange  means  a  calendar  month.  Of  course,  all 
bills  not  draw^n  on  demand  or  at  sight  are  subject  in  some 
countries  to  days  of  grace  ranging  from  one  up  to  ten  days.  In 
other  countries,  as  in  the  State  of  New  York,  no  days  of  grace 
are  allowed.  This  again  is  a  consideration  which  bankers  rather 
than  shippers  have  to  consider. 

Bankers  as  Buyers  or  Collectors  of  Drafts. — To  safeguard 
himself  and  to  provide  that  his  goods  shall  only  be  delivered  to  his 
customers  when  terms  on  which  those  goods  have  been  sold  have 
been  complied  with,  a  shipper  makes  his  bills  of  lading  deliverable 
to  his  own  order,  endorses  them,  preferably  in  blank,  and  passes 

1  A  draft  at  "three  days  after  sight"  is  not  classed  as  a  "time  bill" — 
partly,  perhaps,  because  in  Great  Britain  three  days'  bills  are  not  subject 
to  stamp-tax,  longer  bills  are. 


478  PRACTICAL  EXPORTING 

them  through  a  responsible  banker  accompanied  by  a  draft 
drawn  on  his  customer  in  accordance  with  terms  on  which  the 
sale  has  been  negotiated.  The  banker  will  not  surrender  title 
to  the  goods  that  have  been  shipped  until  the  terms  of  the 
draft  have  been  satisfied.  The  shipper  may  simply  hand  the 
documents  over  to  a  banker  in  the  United  States  to  be  sent 
abroad  to  that  banker's  correspondents  at  point  of  destination 
for  collection,  or  he  may  forward  by  mail  directly  to  som6 
known  and  reputable  banking  house  established  at  point  of 
destination.  The  shipper  may  either  merely  instruct  collection 
of  amounts  involved  and  ultimate  return  to  the  United  States, 
or  he  may  "sell"  his  drafts  to  American  bankers  and  put  him- 
self immediately  in  funds,  if  he  does  not  care  to  have  the 
amounts  involved  outstanding  for  possibly  a  considerable  length 
of  time.  The  latter  is  the  course  usually  pursued  by  exporters 
of  the  United  States  as  well  as  by  European  exporters. 

Many  large  banking  houses  are  organized  chiefly  for  dealing 
in  foreign  exchange.  Many  other  bankers  establish  special  de- 
partments for  handling  the  same  sort  of  business,  largely  on 
account  of  the  profits  involved.  How  the  "sale"  of  foreign 
drafts  is  arranged  we  shall  proceed  in  a  moment  to  examine.  It 
is  to  be  noted,  however,  that  some  large  and  rich  American 
manufacturers  prefer  simply  to  send  their  foreign  bills  of  ex- 
change forward  for  collection  without  attempting  to  realize 
cash  for  them  when  the  goods  are  despatched.  Probably  few 
American  concerns  are  in  position  to  carry  on  any  extensive 
export  trade  on  this  basis.  Even  in  Europe  there  are  few 
among  the  large  exporters  who  can  afford  to  have  outstanding 
the  considerable  amounts  of  money  which  would  be  necessitated 
were  all  their  drafts  to  be  sent  forward  for  collection  only. 

SELLING  DRAFTS  TO  BANKERS 

"The  primary  function  of  the  international  banker  is  to 
finance  imports  and  exports  of  merchandise  by  purchasing  and 
selling  bills  of  exchange  drawn  against  shipments  of  merchan- 
dise or  by  establishing  commercial  credits  in  foreign  markets." 
This  statement  is  made  by  F.  A.  Goodhue,  Vice  President  of  the 
First  National  Bank,  of  Boston.  Franklin  Escher,  writing  in 
the  American  Exporter  of  the  many  banks  and  trust  companies 


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FINANCING  FOREIGN  BUISIXESIS  479 

iu  New  York  City  in  addition  to  the  great  international  bank- 
ing houses,  all  of  them  carrying  on  a  regular  foreign  exchange 
business,  buying  bills  from  those  who  have  them  to  sell  and  sell- 
ing bills  to  those  who  want  to  buy,  observes : 

"For  a  national  bank  to  have  a  foreign  department  was, 
until  only  a  few  years  ago,  an  unusual  thing,  the  business  being 
concentrated  almost  entirely  in  the  hands  of  private  bankers. 
Recent  ytars  have,  however,  seen  a  great  change  in  this  re- 
gard, AVhere  it  was  the  exception  for  the  big  bank  or  trust  com- 
pany to  do  a  regular  foreign  exchange  business  only  a  com- 
parativel}'  short  time  ago,  it  is  now  the  rule.  As  the  business 
has  grown  in  scope  and  importance  it  has  come  about  that  the 
progressive  bank  has  felt  itself  called  upon  to  supply  to  its  cus- 
tomers those  facilities  which  they  have  come  to  demand.  In- 
ability to  furnish  drafts  drawn  on  foreign  countries,  letters  of 
credit  and  other  foreign  exchange  facilities,  caused  the  transfer 
of  many  deposit  accounts  to  rival  banks  able  to  furnish,  those 
facilities.  When  the  banks  began  to  see  it  that  wa}-  they  were 
quick  enough  to  install  foreign  departments  capable  of  render- 
ing satisfactorily  any  service  which  depositors  might  require. 
In  the  great  majority  of  instances  the  installation  of  a  foreign 
department  has  opened  up  such  possibilities  of  profit  that  the 
necessary  arrangements  have  been  made  for  doing  the  business 
on  a  wholesale  basis. 

Function  of  the  Foreign  Exchange  Banker. — "The  under- 
lying business  of  these  institutions  and  of  the  private  bankers 
who  handle  foreign  exchange  on  a  large  scale,  is  to  buy  bills  in 
this  market,  deposit  them  with  their  banking  correspondents  in 
London,  Paris,  Berlin  and  other  great  financial  centers  abroad, 
and  then  to  draw  and  sell  their  own  drafts,  on  these  deposit  ac- 
counts. However  complicated  the  business  may  be,  the  under- 
lying principle  is  always  the  same — that  is  to  say,  the  house  is 
all  the  time  establishing  balances  at  London  and  other  financial 
centers  and  then  selling  them  out  for  more  dollars  than  it  cost 
to  put  them  over  there.  Whether  the  bills  that  are  sent  over  to 
create  these  balances  are  drawn  against  grain  or  steel  or  meat, 
or  whether  they  are  drawn  at  sight  or  at  thirty  days'  sight  or  at 
sixty  days'  sight  makes  not  the  slightest  difference.  Underlying 
every  transaction  is  the  fact  that  these  houses  engaged  in  the 


480  PRACTICAL  EXPORTING 

foreign  exchange  business  keep  balances  with  one  or  more  corre- 
spondents at  all  the  principal  centers  abroad,  and  that  as  they 
sell  their  own  drafts  against  these  balances,  they  are  constantly 
under  the  need  of  replenishing  them.  Beyond  a  certain  mini- 
mum the  balance  cannot  be  allowed  to  fall.  If  the  house  wants 
to  sell  its  own  drafts,  therefore,  it  "has  got  to  keep  sending  over 
deposits  to  make  its  account  good."  f 

No  one  can  estimate  the  great  future  possibilities  in  financing 
our  foreign  trade,  or  possible  developments  in  this  country  as 
likely  to  be  influenced  by  the  Federal  Reserve  Act,  the  establish- 
ment of  foreign  branches  of  American  banks  and  the  extraor- 
dinary and  totally  unanticipated  financial  developments  arising 
from  the  war  and  the  trade  of  the  world  as  affected  by  it. 
What  is  imperative  for  us  to-day  is  to  know  and  to  understand 
our  actually  existing  position  and  facilities.  The  primary,  out- 
standing fact  is  that  bankers  establish  themselves  in  the  foreign 
exchange  business  for  the  express  purpose  of  buying  and  selling 
foreign  drafts  and  issuing  and  receiving  commercial  letters 
of  credit. 

If  shippers  of  merchandise  did  not  require  immediate  funds 
with  which  to  undertake  fresh  operations  and  were  content  to 
forward  their  drafts  for  collection  only,  then  the  foreign  ex- 
change business  of  New  York  bankers  would  be  reduced  to  a 
small  fraction  of  its  present  magnitude.  It  is  essentially  the 
foreign  exchange  banker's  province  to  buy  and  sell  exchange. 
That  is  the  prime  reason  for  his  existence  and  the  practice  of 
selling  foreign  drafts  to  these  bankers,  that  is,  of  realizing  cash 
for  the  values  of  invoices  of  goods  shipped  abroad,  is  so  much 
the  rule  that  exceptions  are  notable.  AVe  have,  then,  to  inquire 
how  this  business  is  done  an'd  how  advantage  can  be  taken  of  the 
facilities  offered. 

Bankers  as  Buyers  and  Sellers  of  Foreign  Exchange. — We 
have  just  noted  the  increase  in  the -number  of  New  York  and 
other  American  banks  devoted  wholly  or  in  part  to  foreign  ex- 
change business.  We  have  remarked  that  only  a  small  part  of 
the  business  in  question  consists  in  the  mere  collection  of  drafts. 
An  overwhelmingly  large  proportion  of  this  business  consists  in 
the  purchase  and  sale  of  foreign  drafts,  yet  the  usual  expression 
"sale"  or  "discount"  is  not  the  proper  term  to  apply  to  the 


FINANCING  FOREIGN  BUSINESS  481 

transaction  indicated.  When  an  exporter  wishes  to  secure  cash 
for  a  shipment  of  goods  to  a  foreign  customer  and  negotiates  his 
drafts  and  documents  representing  that  shipment  with  a  foreign 
exchange  banker,  the  transaction  is  neither  sale  nor  discount. 
It  is  virtually  the  negotiation  of  a  loan  from  the  bank  on  the 
security  of  the  exporter's  signature,  plus  the  realizable  value  of 
the  property,  covered  by  the  bills  of  lading  and  protected  by 
marine  insurance,  which  is  hypothecated  to  the  bank  through 
endorsement  of  the  exporter  as  a  b.asis  for  the  loan  which  he 
seeks.  Rather  curiously,  some  bankers  who  are  chiefly  devoted 
to  this  sort  of  business  are  fond  of  emphasizing  the  loan  char- 
acter of  such  negotiations  on  which  they  really  depend  for  an- 
nual dividends. 

No  exporter  should,  however,  be  unfavorably  affected  by  the 
use  of  the  word  "loan"  in  this  business.  Clearly  there  is  slight 
difference  between  advances  of  money  against  the  hypotheca- 
tion of  valuable  merchandise  shipped  in  the  legitimate  course 
of  trade,  and  the  hypothecation  of  stock  exchange  securities  as 
a  basis  for  advances.  Moreover,  the  securing  of  advances  of 
cash  against  shipping  documents  is  the  established  and  well 
nigh  universal  practice  in  international  trade  the  world  over. 
It  is  followed  not  alone  by  American  exporters  but  to  an  even 
greater  extent  by  European  exporters  as  well  as  by  the  Japanese 
and  Chinese  and  every  other  nationality  which  ships  its  products 
to  the  outside  world.  Few  if  any  manufacturers  or  exporters 
in  any  country  have  capital  enough  of  their  own  to  carry  on  an 
extensive  or  general  foreig-n  trade  unless  their  shipments  are 
financed  by  bankers,  who  indeed,  as  we  have  noted,  are  primarily 
established  for  the  express  purpose  of  performing  this  very  kind 
of  finance. 

These  bankers  will,  on  intimate  acquaintance,  at  least  in  times 
of  normal  finance,  be  found  amenable  to  almt)st  any  kind  of 
legitimate  argument  and  some  of  them  are  always  to  be  dis- 
covered who  will  assist  shippers  in  the  most  generous  fashion. 
For  instance,  when  an  exporter  has  had  occasion  to  load  a 
steamer  with  a  quantity  of  goods  for  which  his  ready  funds 
did  not  permit  him  to  put  up  the  necessary  prompt  cash,  ar- 
rangements have  been  made  with  New  York  bankers  for  advanc- 
ing the  necessary  funds  day  by  day  as  the  ship  is  loaded,  against 


482  PRACTICAL  EXPORTING 

dock  receipts  for  the  quantities  of  cargo  that  have  been  put 
aboard  the  previous  day. 

Let  no  one  fancy,  however,  that  quite  a  new  acquaintance  can 
go  to  a  banker  and  pledge  him  in  advance  to  any  general  pro- 
cedure in  future  or  in  regard  to  indefinite  business,  can  expect  a 
banker  as  a  rule  to  give  a  definite  reply  to  a  purely  hypothetical 
question.  When  a  shipper  has  a  certain  and  specific  business 
proposition  in  hand,  then  he  can  make  a  firm  deal  with  some 
banker  who  will  be  found  to  be  interested  in  it. 

Inland  Bankers  and  Foreign  Drafts. — Bankers  making  a 
specialty  of  dealing  in  foreign  exchange  are  not  confined  to  New 
York  or  to  other  American  ports.  A  number  of  prominent 
banks  at  inland  cities  have  of  late  years  established  their  own 
foreign  exchange  departments,  maintaining  direct  relations  with 
at  least  those  principal  foreign  markets  with  which  manufac- 
turers and  shippers  in  their  respective  cities  and  districts  do 
most  of  their  foreign  business.  It  is  probable,  as  it  is  devoutly 
to  be  hoped,  that  the  example  of  these  banks  may  be  followed  by 
many  others. 

While,  of  course,  it  is  possible  for  a  manufacturer  at  any  point 
to  put  his  drafts  accompanied  by  shipping  documents  through 
his  local  banks,  yet  there  are  certain  objections  and  unnecessary 
expenses  accompanying  that  practice.  Too  few  of  our  inland 
banks  understand  anything  at  all  about  foreign  exchange  rela- 
tions or  appreciate  the  distinction  between  a  foreign  documen- 
tary bill  of  exchange  and  the  manufacturer's  every-day  clean 
draft  on  an  American  debtor.  It  happens,  therefore,  that  a 
manufacturer  who  wishes  to  cash  his  foreign  draft  with  his  local 
banker  may  be  accommodated  by  the  latter  only  by  having  the 
amount  advanced  against  his  documents  charged  up  against 
his  regular  line  of  loans  and  discounts,  that  is,  considered  in 
precisely  the  same  light  as  would  be  his  note  presented  for  dis- 
count. This  is  an  utterly  indefensible  practice  of  inland  bankers 
and  the  proof  of  it  is  that,  quite  irrespective  of  the  manu- 
facturer's existing  indebtedness  to  his  local  bank,  he  can  take 
the  documents  representing  a  foreign  business  transaction  to  a 
professional  foreign  exchange  banker,  who  may  be  personally 
unknown  to  him,  and  under  suitable  conditions,  i.e.,  when  the 


FINANCING  FOREIGN  BUSINESS  483 

banker  is  satistied  as  to  his  standing,  secure  from  the  latter  the 
cash  which  he  requires. 

Another  consideration  to  be  borne  in  mind  in  attempting  this       , 

i.     „£     1 :„„„^     i-i 1,      1.1      ^ 1 •        ,1 


xorK  as  a  lavor,  not  aoaaing  tncir  own  enaorsemcnt  ana  nonce,  charging 
no  commission  for  themselves. 


HENRY  M.  FLAGG,  INC. 

-'  ^  //  JREASUHER 


r^iJ^'^- 


^^ri|^^o^(( 


^Slr^/^UM^^^ 


y/^^m/^Ji^j^/ymi^A/'Mf^ 


Form  33 — Draft  Against  Banker's  Credit. 


CwJ 


FINANCING  FOREIGN  BUSINESS  483 

banker  is  satisfied  as  to  liis  standing,  secure  from  the  latter  the 
cash  which  he  requires. 

Another  consideration  to  be  borne  in  mind  in  attempting  this 
sort  of  business  through  local  bankers  is  the  extra  expense 
sometimes  involved  through  unnecessary  bank  commissions. 
Thus,  if  a  local  bank  in  Buffalo,  N.  Y.,  has  not  its  own  foreign 
exchange  department  maintaining  direct  relations  with  bankers 
in  foreign  markets,  it  must  forward  the  documents  presented  by 
a  Buffalo  manufacturer  to  that  bank's  New  York  correspondent 
bank.  The  latter,  in  turn,  may  not  be  engaged  in  the  foreign 
exchange  business.  One  or  two  of  the  most  popular  New  York 
correspondents  of  inland  American  banks  are  still  counted 
among  those  New  York  banks  that  do  not  have  their  own  for- 
eign departments.  If  this  is  the  case,  the  New  York  bank  in 
question  must  send  the  Buffalo  manufacturer's  bills  to  some  of 
its  friends  who  are  engaged  in  the  foreign  exchange  business. 

By  this  time  the  manufacturer's  drafts,  bearing  his  own  signa- 
ture, the  endorsement  of  his  local  bank  and  the  endorsement  of 
that  bank's  New  York  correspondent,  have  become  prime  paper, 
3'et  it  is  to  be  doubted  if  the  best  rates  of  exchange  are  always 
secured  because  such  bills  are  not  usually  offered  in  competi- 
tion but  are  more  often  simply  placed  with  some  foreign  ex- 
change house  with  which  the  New  York  bank  is  on  especially 
intimate  terms.  In  any  case  the  proceeds  of  the  bills,  when 
sold,  may  go  back  to  the  Buffalo  manufacturer  with  one  unneces- 
sary bank  commission  if  not  two  of  them.^ 

On  these  accounts,  while  doing  business  directly  with  his 
local  banker  may  seem  to  a  manufacturer  to  be  preferable  in 
some  respects,  yet  he  ought  to  consult  economy  and  advantage 
in  carrying  on  his  foreign  business  and  he  should  insist  on  re- 
ceiving as  favorable  treatment  as  he  can  receive  by  instituting 
the  altogether  possible  direct  relations  with  New  York  foreign 
exchange  bankers.  Bringing  this  business  home  to  inland 
bankers  may  assist  in  promoting  their  dispositioil  to  establish 
their  own  foreign  exchange  departments,  a  development  neither 

1  Some  inland  banks  forward  their  customers,  foreign  drafts  to  New 
York  as  a  favor,  not  addding  their  own  endorsement  and  hence,  charging 
no  commission  for  themselves. 


484  PRACTICAL  EXPORTING 

difficult  nor  expensive  for  them.  In  fact,  in  any  community 
boasting  numerous  manufacturers  carrying  on  a  large  foreign 
trade  in  the  aggregate  such  local  foreign  exchange  banking  ar- 
rangements can  almost  certainly  be  made  profitable  to  the  local 
bankers. 

Who  Can  Sell  Drafts  and  How? — The  first  thing  that  a  for- 
eign exchange  banker  looks  at,  when  off^ered  drafts  accompanied 
by  shipping  documents,  is  the  foreign  country  on  which  the 
drafts  are  drawn,  the  second  is  the  signature  attached  to  these 
drafts  and  the  rating  accorded  such  signature  in  the  books  of 
the  principal  American  commercial  agencies.  Next,  the  banker 
is  interested  in  the  character  of  the  merchandise  that  is  being 
shipped. 

The  market  on  which  a  foreign  draft  is  drawn  affects  a 
banker's  disposition  to  advance  cash  against  a  tendered  draft 
either  because  he  may  or  may  not  have  very  close  or  intimate 
relations  with  the  market  in  question,  or  because  he,  having  a 
large  business  there,  may  or  may  not  be  anxious  for  more  bills 
on  that  market  at  just  the  moment  a  given  draft  is  presented. 
He  may  be  "full  up"  of  bills  on  London,  for  example,  on  a 
certain  day  or  week.  His  balance  with  his  London  bankers  may 
be  large  or  small  and  the  state  of  his  relations  with  that  market 
will  influence  to  some  extent  his  disposition  toward  new  drafts 
on  it  which  are  offered  him.  Large  bankers,  however,  are 
seldom  influenced  by  such  considerations  as  affecting  the  prin- 
cipal commercial  markets  of  the  world.  However,  bankers  do- 
ing a  large  business  with  European  countries  may  not  be  espe- 
cially desirous  for  bills  on  Mexico  or  on  Chile,  while  other 
bankers  may  make  a  specialty  of  the  latter  markets. 

Foreign  exchange  bankers  look  for  their  security  primarily  to 
the  responsibility  resting  in  the  makers  of  foreign  drafts  which 
they  negotiate.  In  case  they  advance  money  against  these  docu- 
mentary drafts  and  the  consignees  of  the  goods  refuse  to  meet 
the  drafts  then  recourse  is  had  on  the  maker  of  the  draft  who  is 
expected  to  refund  the  amounts  which  have  been  advanced,  to- 
gether with  charges  which  may  have  accrued.  In  general  ship- 
ments of  ordinary  merchandise,  the  foreign  concern  against 
whom  a  draft  is  drawn  is  seldom  known  even  by  name  to  the 
American  banker  who  negotiates  these  drafts.     The  American 


FINANCING  FOREIGN  BUSINESS  485 

manufacturer  or  exporter  is,  however,  known  to  the  banker,  at 
least  through  the  readily  available  printed  rating  accorded  him 
in  the  commercial  agency  books.  A  manufacturer  quite  un- 
known to  any  New  York  foreign  exchange  banker  but  who  is 
well  rated  in  these  books  will,  therefore,  usually  find  it  possible 
without  other  introduction  to  persuade  some  of  these  bankers  to 
negotiate  bills  of  exchange  in  which  they  may  be  interested. 

It  is  true  that  a  few  bankers  discourage  the  practice  of  in- 
land manufacturers  attempting  to  do  direct  business  with  them, 
naturally  preferring  that  such  manufacturers  put  their  papers 
through  local  bankers.  The  additional  security  and  sometimes 
profit  of  the  foreign  exchange  banker  have  already  been  noted. 
None  the  less,  even  an  inland  manufacturer  who  enjoys  a  good 
commercial  rating  and  who  has  a  fairly  large  volume  of  foreign 
drafts  to  sell  in  the  course  of  a  year,  will  find  it  possible  to 
institute  direct  mail  relations  with  some  foreign  exchange 
bankers  in  New  York.  The  problem  is  simplified  immensely  if 
such  a  manufacturer  has  a  capable  agent  in  New  York  who  will 
make  himself  personally  known  in  foreign  exchange  circles  and 
undertake  personally  to  negotiate  the  drafts  as  they  are  availble. 

As  a  matter  of  fact,  even  the  small  man  of  no  great  resources 
and  possibly  no  commercial  rating  has  found  it  possible  in 
normal  times  to  find  foreign  exchange  bankers  in  New  York  not 
only  to  assist  him  in  financing  his  export  business  but  willhig  to 
devise  ingenious  ways  for  him  to  finance  operations  otherwise 
impossible  to  him.  This,  of  course,  presupposes  an  exception- 
ally intimate  acquaintance  on  the  part  of  the  banker  with  the 
character  of  the  shipper  and  of  his  business,  and  a  knowledge  of 
his  customers  abroad  with  whom  important  transactions  are  pro- 
posed, with  perfect  assurance  of  the  safe  and  legitimate  char- 
acter of  such  business.  When  all  these  matters  are  frankly  ex- 
plained to  and  fully  understood  by  bankers  it  will  often  be  found 
possible  to  arrange  exceedingly  favorable  terms  of  financing. 

Saleability  of  Drafts. — The  saleability  of  a  foreign  draft,  and 
the  rate  which  bankers  are  willing  to  give  for  it,  vary  not  only 
with  the  standing  of  the  maker  of  such  a  draft  and  according 
to  conditions  in  the  foreign  exchange  market,  but  depend  to  some 
extent  on  the  character  of  the  merchandise  against  which  the 
bill  is  drawn.     Undoubtedly  drafts  drawn  by  houses  which  are 


486  PRACTICAL  EXPORTING 

not  well  known  among  foreign  exchange  bankers,  or  which  are 
not  of  the  highest  commercial  standing,  fail  to  command  as  good 
rates  of  exchange  as  those  prime  bills  bearing  the  signature  of 
firms  widely  and  favorably  known.  Bills  drawn  against  staple 
articles  for  which  there  is  always  a  market  everywhere,  for 
which  market  quotations  are  regularly  published — cotton  and 
grain,  for  example — are,  of  course,  always  more  in  demand  than 
bills  drawn  against  specialties  upon  which  it  would  be  difficult 
for  a  banker  to  realize  in  the  case  of  non-payment  of  the  drafts 
which  he  has  "bought."  Obviously,  a  shipment  of  lanterns  to  a 
certain  foreign  importer  might  not,  if  refused  by  him,  command 
anything  like  invoice  value  when,  because  of  such  refusal,  sub- 
jected to  forced  sale.  Machinery,  too,  is  in  the  nature  of  a 
specialty.  Hence,  drafts  covering  such  shipments  usually  com- 
mand a  little  lower  price  than  do  grain  bills  or  cotton  bills. 

Advances  Against  Drafts. — In  the  United  States  ordinary 
shippers  expect  to  obtain  cash  in  full  for  the  drafts  which  they 
sell  to  bankers.  Large  exporters,  particularly  the  professional 
export  commission  houses,  and  very  especially  those  houses  doing 
business  with  certain  parts  of  Latin  America,  do  not  always 
succeed  in  securing  full  cash  but  may  have  to  accept  from 
bankers  from  75  per  cent,  to  90  per  cent,  of  the  face  value  of 
their  bills.  This  is  the  custom  also  in  England  and  in  Europe 
generally.  Perhaps  95  per  cent,  is  the  maximum  which  British 
bankers  usually  advance,  while  in  Germany  the  average  advance 
is  said  to  have  been  in  the  past  from  65  per  cent,  to  70  per  cent, 
with  90  per  cent,  as  a  maximum.  The  ordinary  exporter,  how- 
ever, has  comparatively  little  difficulty  in  financing  his  regular 
shipments  in  full.  The  usual  procedure  follows  steps  similar 
to  these: 

Process  of  Negotiating'  Foreign  Drafts. — When  a  shipment  is 
ready  to  go  forward  and  the  invoice  value  has  been  computed, 
inquiry  is  made  of  foreign  exchange  bankers,  who  it  is  thought 
may  be  interested  in  negotiating  the  transaction,  as  to  terms 
which  they  will  offer  for  a  draft  amounting  approximately  to  a 
given  sum,  drawn  on  certain  terms,  with  full  particulars  of  the 
nature  of  the  goods,  name  of  consignees,  etc.  Usually  several 
bankers  are  approached,  because  one  of  them  may  not  care  for 
the  draft  in  question,  or  one  may  be  willing  to  give  a  little  better 


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lUllOU)  ail  egcn  bg  tticac  IpCCSCntB,  Thai  Ihr  undersigned  may  fr, 
future,  sell  lo  Brijomhall  &  Company  llieir  bills  of  exchange  drawn  o 
in  Great  Britain,  or  on  the  Continent,  against  shipments  of  merchandise  lo  be  represented 
by  bills  of  lading  "to  order"  and  endorsed  in  blank,  ■uhich  bills  of  lading  are  to  be  at- 
tached lo  said  bills  of  exchange  as  collateral  security  for  said  bills. 

CTbCCCfOCe,  in  case  of  sale  to  Broomhall  &  Company  of  any  bills  of  exchange  as  above, 
the  undersigned  hereby  agrees  with  Broomhall  &  Company  and  the  holders  of  the  bills  of 
exchange  for  the  time  being; 

I.  That  if  the  said  bills  of  exchange  are  accepted  the  bills  of  lading  may  be  given  up 
to  the  drawees  absolutely,  or  the  holders  may  in  the  exercise  of  their  discretion,  before  sur- 
render of  the  bills  of  lading,  require  a  banker's  guarantee  for  the  due  payment  of  the  bills 
of  exchange,  or  a  broker's  undertaking  to  account  to  them  for  the  proceeds  of  the  goods 


othe 


■itte. 


Or,  if  so  indicated  by  a  memorandum  signed  by  the  undersigned  and  attached  to  the  bills 
of  exchange  when  sold,  the  bills  of  lading  may  be  given  up  to  the  drawees  absolutely,  when 
said  bills  of  exchange  are  accepted,  without  prejudice  to  claim  upon  the  undersigned,  in  the 
event  of  the  bills  of  exchange  not  being  paid  at  maturity; 

Or,  if  so  indicated  by  a  memorandum  signed  by  the  undersigned  and  attached  to  the  bills 
of  exchange  when  sold,  the  bills  of  lading  may  be  held  until  the  bills  of  exchange  are  paid. 

2.  And  the  undersigned  further  agrees  that  in  the  event  of  default  in  acceptance,  or  pay- 
ment at  maturity,  of  any  of  the  bills  of  exchange,  or  on  the  drawees'  or  acceptors'  sus- 
pension before  surrender  of  the  bills  of  lading  then  Broomhall  &  Company  or  the  holders 
of  the  bills  of  exchange  for  the  time  being,  are  hereby  authorized  to  sell  the  merchan- 
dise covered  by  the  bills  of  lading  at  discretion  as  to  time,  place,  and  manner,  without 
any  demand  upon  or  notice  to  the  undersigned,  and  for  account  and  sole  risk  of  the  under- 
signed, and  to  apply  the  proceeds  when  received  (after  deducting  all  expenses  and  com- 
missions, for  sale  and  guarantee)  in  or  towards  payment  of  the  bills  of  exchange. 

3.  The  merchandise  shipments  will  be  fully  insured  either  here  or  abroad  and  the  un- 
dersigned hereby  agrees  in  case  of  loss,  tlial  the  said  insurance  shall  be  held  for  the  benefit 
of  Broomhall  &  Company  for  payment  of  the  bills  of  exchange.  In  case  the  insurance 
shall  at  any  time  before  surrender  of  the  bills  of  lading  be  considered  unsatisfactory  lo 
the  holders  of  the  bills,  they  at  their  discretion  are  authorized  to  re-insure  the  merchandise 
for  account  of  all  concerned,  and  the  undersigned  hereby  agrees  to  refund  to  Broomhall 
&  Company  on  application,  the  cost  of  said  re-insurance, 

4.  It  is  hereby  understood  and  agreed  that  any  action  taken  under  this  agreement  by 
the  holders  of  the  bills  of  exchange  for  the  time  being,  or  by  their  agents,  shall  be  for  the 
account  and  sole  risk  of  the  undersigned  and  shall  in  no  case  be  construed  as  prejudicing 
their  claim  against  the  undersigned  as  drawers  of  the  bills  of  exchange  in  case  of  de- 
fault of  the  acceptors  or  guarantors  to  pay  said  bills  of  exchange  at  maturity,  or  of  in- 
sufficiency of  proceeds,  and  the  undersigned  hereby  undertakes  that  any  claim  arising  there- 
from shall  be  paid  to  Broomhall  &  Company  or  their  assigns,  on  demand. 

"  If  the  documents,  hereby  hypothecated,  are  turreiidered  against 
paymeal  0/  Bills  of  Exchangr  before  malurily,  the  allowance  of  Jis-BKOWNE,  GREENE  4  WHYTE 
count  to  the  acceptor  is  to  be  at  the  rate  of  half  per  cent,  per  annum, 
above  the  then  advertised  rate  for  short  deposits  of  the  leading  Joints 
«/or*  Baah  in  London."  "         PRESIIIENT 


c 


FINANCING  FOREIGN  BUSINESS  487 

price  for  it  than  another.  Usually,  it  is  necessary  to  know  in 
advance  of  the  actual  writing  of  the  draft  what  rate  will  be  paid 
by  bankers  willing-  to  negotiate  it.  This  may  be  because  the 
amount  of  the  draft  is  to  be  written  in  sterling  or  some  other 
foreign  money  and  the  rate  of  exchange  offered  by  bankers  must 
be  known  in  order  to  make  the  conversion  of  the  total  amount  of 
dollars  into  such  a  sum  in  the  foreign  currency  as  will  return 
the  exact  invoice  amount  in  American  currency.  Or,  it  may  be 
because,  if  the  draft  is  drawn  in  dollars,  the  charges  for  bank 
interest,  commission,  etc.,  must  be  added  to  the  invoice  totals. 

The  process  of  obtaining  offers  on  a  given  draft  is  usually 
carried  out  in  New  York  by  personal  interviews  with  interested 
bankers.  An  inland  house  may,  however,  take  it  up  by  corre- 
spondence with  New  York  foreign  exchange  houses,  describing 
the  nature  of  the  transaction  in  an  initial  letter,  receiving 
telegraphic  reply  as  to  rate  which  will  be  offered,  which  must  be 
promptly  accepted  by  telegram  and  drafts  and  documents 
despatched  by  immediately  succeeding  mail. 

The  understanding  between  buyer  and  seller  of  drafts  always 
is  that  the  seller  shall  be  held  responsible  for  refund  of  advances 
made  by  buyers  in  case  drawees  fail  to  honor  terms  of  drafts 
which  have  been  negotiated.  A  few  foreign  exchange  bankers 
still  require  firms  from  whom  they  buy  drafts  to  execute  a  form 
of  agreement  to  this  effect.^  The  principle,  however,  is  so  well 
established  and  so  generally  understood  and  accepted  that 
specific  agreements  are  not  required  in  each  and  every  instance, 
or  even  in  a  general  way  from  regular  shippers  who  are  con- 
stantly doing  business  with  bankers.  In  any  case,  this  responsi- 
bility remains  and  is  recognized. 

When  a  banker's  offers  have  been  secured  and  found  satis- 
factory, all  the  documents  covering  the  proposed  transaction  are 
placed  in  the  banker's  hands  and  the  latter  immediately  de- 
livers a  check  covering  the  required  amount.  Such  a  cheek  is, 
of  course,  placed  in  the  hands  of  parties  located  in  New  York, 
In  the  case  of  out  of  town  concerns  it  may  be  remitted  direct  to 
them  by  mail,  or  may  be  deposited  to  their  account  in  their  New 
York  banks,  or  may  be  carried  to  their  credit  on  the  books  of  the 
bankers  negotiating  the  drafts  in  case  the  out  of  town  concerns 

1  See  Form  29. 


488  PRACTICAL  EXPORTING 

desire  to  open  such  accounts,  or,  as  is  not  alwaj^s  the  case,  foreign 
exchange  bankers  carry  such  accounts.  These  are  features  of 
the  business  arranged  according  to  circumstances  of  individual 
transactions. 

The  Documents  Necessary. — In  doing  business  with  foreign 
exchange  bankers  it  is  essential  to  have  a  complete  set  of  all 
necessary  documents  and  to  have  all  in  perfect  order,  because 
if  there  appears  to  be  any  discrepancy  between  evidences  of  ship- 
ment and  details  of  buyers '  orders  the  latter  may  refuse  to  accept 
drafts  drawn  on  them.  The  documents  necessary  are  the  follow- 
ing: Draft  in  duplicate,  drawn  "to  ourselves,"  endorsed  either 
in  blank  or  specifically  to  the  banker  with  whom  the  transaction 
is  to  be  negotiated,^  preferably  in  blank;  evidence  of  shipment 
in  the  shape  of  a  "full  set,"  that  is,  all  the  negotiable  copies  of 
the  bills  of  lading  signed  by  representatives  of  the  ship  owners 
drawn  "to  order"  and  endorsed  usually  in  blank;  at  least  two 
copies  of  invoice  and  (if  necessary)  statement  of  all  additional 
items  going  to  make  up  the  total  sum  for  which  draft  is  drawn ; 
certificates  of  marine  insurance  in  duplicate,  perhaps  also  of  war 
risk,  endorsed  in  blank;  special  requirements  of  certain  trades, 
such  as  certificates  of  analysis,  weight,  inspection,  etc. — one  copy 
of  such  certificates  may  only  be  necessary  although  it  is  better 
to  have  them  in  duplicate  if  possible ;  consular  invoices  or  cer- 
tificates of  origin,  when  goods  are  destined  to  countries  requiring 
such  documents.     Types  of  these  documents  are  illustrated. 

It  may  be  noted  that  courts  of  the  United  States  as  of  other 
countries  have  held  that  the  mere  attachment  of  bills  of  lading 
to  a  draft  does  not  make  the  former  a  part  of  the  latter.  The 
one  who  accepts  such  a  draft  is  assiuned  to  do  so  on  the  faith  of 
the  draft  itself.  None  the  less,  bills  of  lading  if  fraudulent  do 
of  course  render  those  responsible  open  to  criminal  prosecution. 
Bankers,  therefore,  naturally  assume  that  the  title  to  property 
represented  by  an  endorsed  bill  of  lading  is  legitimate  and  has 
honestly  been  acquired.  The  security  conveyed  to  bankers  by 
proper  endorsement  of  the  several  documents  in  a  transaction 
is  an  important  element  affecting  rates  and  risks,  even  possibili- 
ties of  negotiating  such  transactions. 

Instructions  to  Bankers. — When  foreign  drafts  are  handed  to 

1  See  Endorsement  Form  17. 


FTNANaiNG  FOREIGN  BTIRINEHH 


489 


TO  THE  NATIONAL  CitY  BANK  OF  NEW  YORK 
ITS  BRANCHES  AGENTS  &  CORRESPONDENTS. 

INSTRUCTIONS  REGARDING  ATTACHED  6RAFT. 

!Prese)iton  receipt 

9^  tJ  tM  ^n>  Of  J  ft  \sd  0f%  ^€s»ei 


J/eliver  documents  against 

Accqjtcuwe 

Protest  /or  nonpayment 
Protest  ^rnonaccepttpice 
^€da^attherateof_o,percentperait- 
mtmmca/beaUffwedifpaidbe^maiia^. 
In  case  ofneedre/erto 

J.M«amith^B.Mltre  840 

^  "mease  of'need' is  fidfy  empowered 
to  instruct  i/ou  with  regard  to  disposi- 
tion of  draft  and  documents. 
A.  B.G.  MOMAM  CO. 


.  (Ky 

tMtanMMMMiMMMannF 


r^w^tvif^^^ 


BT 


t:^  < 
«^  q: 

m 

t^  CO 


4ll52u 


m. 


ji 


'^ 


J'ir^/'>^jv^^-'"-'-C-'-^y_~^^j*"v"y-^-'' -'-'-'.'".'".' 


Foi 
hence 
in  a  : 
to  be 


.Pnsenta. 


Chicago,    May  16 


-^^<2_ 


At  alxty 


e^t. date 


cases 
iLacbiheiy  ex 
S.S.Verdi 


c 


FINANCING  FOREIGN  BUSINESS  489 

American  banking  houses  to  be  taken  care  of,  certain  instruc- 
tions must  accompany  them.^  It  is  customary  to  give  these  in- 
structions in  separate  memoranda  pinned  to  the  drafts,  or  in  a 
perforated,  detachable  stub,  instead  of  including  them  on  the 
face  of  the  document.  The  most  usual  and  necessary  instruc- 
tions include:  As  to  delivery  of  bills  of  lading.  If  a  draft  is 
drawn  at  sight  then,  of  course,  the  accompanying  bills  of  lading 
are  only  handed  to  consignee  when  the  draft  has  been  paid.  If, 
however,  the  draft  is  drawn  at  a  given  period  after  sight  (or 
after  date)  then  the  presenting  bankers  may  be  instructed  to 
hand  over  the  bills  of  lading  to  consignee  either  (1)  only  against 
payment,  or  (2)  when  the  consignee  "accepts"  the  draft.  The 
former  course  is  referred  to  as  "documents  for  payment"  (ab- 
breviated "D.P. ").  The  latter  is  called  "documents  for  ac- 
ceptance" ("D.A."). 

Instructions  should  also  be  given  to  bankers  as  to  whether 
or  not  a  draft  is  to  be  locally  protested  if  unpaid,  if  acceptance 
is  refused,  or,  if  acceptance  is  dishonored.  The  rule  should  be  to 
instruct  such  protest  in  every  instance.  Non-protested  accept- 
ances have  little  legal  value  in  many  countries. 

"In  case  of  need"  instructions  are  sometimes  written  imme- 
diately on  the  face  of  a  draft,-  for  example,  at  top  or  at  bottom, 
usually  abbreviated  to  "In  case  of  need  with  3Iessrs.  So-and-So." 
Many  shippers,  however,  believe  it  preferable  to  give  these  in- 
structions, with  others,  in  separate  form  accompanying  the  draft, 
rather  than  written  on  its  face.^  When  this  is  done  such  sepa- 
rate instructions  may  read:  "In  case  of  need  and  before  in- 
curring notarial  or  other  expenses,  including  cabling  dishonor, 

refer  to . "     What  the  "in  case  of  need"  reference  implies 

has  been  explained  in  our  discussion  of  the  functions  of  foreign 
agents. 

Another  matter  about  which  bankers  holding  foreign  drafts 
may  require  instructions  is  as  to  possible  rates  of  discount  for 
cash  or  for  allowance  of  interest  in  anticipated  payments  which 
they  may  be  authorized  to  accept.  In  the  Far  East,  and  some- 
times in  other  parts  of  the  world,  owing  to  special  conditions 

1  See  Form  36. 

2  See  Form  37. 

3  See  Form  36. 


4dO  PRACTICAL  EXPORTING 

that  may  be  ruling,  importers  often  prefer  to  take  advantage  of 
favorable  opportunities  for  settling  a  draft  in  advance  of  its  due 
date.  In  such  eases  the  rate  to  be  allowed  for  anticipated  pay- 
ments is  usually  agreed  upon  in  advance  between  shipper  and 
consignee,  although  in  the  Far  East  usually  the  "rates  of  re- 
bate" are  in  accordance  with  rates  published  by  the  local  bankers 
and  their  small  differences,  including  discount  rates,  go  to  swell 
the  profit  of  the  bankers.  The  German  and  usual  American 
custom  is  to  rebate  one-half  of  1  per  cent,  per  month  (6  per  cent, 
per  annum)  for  payments  in  advance  of  the  nominal  running 
time  of  a  draft.  In  the  United  Kingdom  it  is  usually  based  on 
an  increase  (usually  1  per  cent.)  under  the  published  discount 
rate  of  the  Bank  of  England.  Instructions  in  these  regards  are 
sometimes  written  on  the  face  of  the  draft  itself  but  more  often, 
and  probably  by  preference,  should  be  given  in  separate  form 
attached  to  the  draft. 

It  may  not  be  out  of  place  at  this  point  to  re-emphasize  the 
necessity,  when  drafts  are  drawn,  of  notifying  customers  imme- 
diately to  that  effect,  naming  the  amount  of  the  draft,  the  terms 
on  which  drawn,  and  identifying  the  shipment  to  which  it  re- 
lates, coupled  with  a  solicitation  for  the  customer's  kind  and 
prompt  attention. 

Bank  Charges. — Costs  of  collecting  a  draft  are  composed  of 
the  following  items:  Commission  for  the  collection  and  post- 
age and  revenue  stamp  taxes.  The  latter  include  the  revenue 
stamp  of  the  country  where  the  collection  is  made  and  may  some- 
times include  revenue  stamps  of  intermediate  countries  where 
drafts  are  negotiated;  also  when  proceeds  are  returned  in  the 
shape  of  a  counter  remittance,  the  stamps  on  the  latter.  The 
postage  item  is  especially  figured  on  each  transaction.  Banks 
charge  established  rates  for  collection  in  the  form  of  special 
tariffs.  They  may  vary  from  one-eighth  of  1  per  cent,  to  2  per 
cent.  Perhaps  from  one-eighth  to  one-half  of  1  per  cent,  is 
most  usual. 

Collection  costs  and  commissions  are,  of  course,  apart  and 
separate  from  the  interest  charge  involved  in  the  period  for 
which  a  draft  may  run  and  for  the  time  involved  in  getting 
draft  fhrough  to  point  on  which  drawn  and  for  returning  pro- 
ceeds from  such  point  to  place  of  origin.     What  such  interest 


f 


FINANCING  FOREIGN  BUSINESS  491 

may  amount  to  may  be  illustrated  in  taking  the  usual  form  of 
draft  on  so  important  a  South  American  market  as  Buenos 
Aires.  Drafts  on  that  city  are  usually  drawn  at  ninety  days' 
sight.  If  draw^i  in  dollars  and  remittance  be  made  direct  to 
New  York,  bankers  nuist  calculate  interest  for  the  ninety-day 
term   of   the   draft   nlns  tliirtv  r!av«'   muil    tJino   Mo^ir   v^vV   +r. 


DO  NOT  PRESENT  THIS  WITH  DRAFT. 

AFT  No _......45 /.. ..$1153.00 

Jimenez..  yCia. „ 

able  tlirough Hatioiaal  City  Bank  of  New  York _...,„ _ 

irrender  documents  ca»=yajauiaU.jo«rfy~  on  acceptance. 

ttts  must  be  accepted  on  presentation. 

ival  of  Goods  has  no  bearing  on  time  of  acceptance. 

In  case  of  need  and  before  incurring  Notarial  or  other  expenses,  including  cabling 

onoiir,  refer  to J. Mt SmitJi, „ 

B.   Mitre  .840, „ ' 


Yours  truly,  A.  B^q^  FfpAfAN  CO. 

PER„ 


-^mA- 


TREASURER. 


Form  36 — Instructions  to  Bankers. 

Instructions  in  style  similar  to  that  shown  are  attached  to  drafts  which 
are  passed  through  bankers,  governing  their  handling  of  such  drafts.  Sep- 
arate slips  are  much  commoner  than  stubs  attached  to  drafts. 


worth  a  trille  less  than  4.S2,  liguring  intorcst  for  00  days  at  5  per  cent, 
per  annum.  Bankers  would  proliably  quote  i.HlVj,  the  margin  coverinoj 
Englisli  bill-stamp,  postage  and  commission.  Interest  may  run  from  3  to 
6  per  cent.,  according  to  market  and  various  conditions. 

2  See  Form  ."37.     .Some  Ijaiiks  prefer  the  clause  to  read  for  South  Africa: 
"At  Exchange  as  per  Endorsement." 


490  PRACTICAL  EXPORTING 

that  may  be  ruling,  importers  often  prefer  to  take  advantage  of 
favorable  opportunities  for  settling  a  draft  in  advance  of  its  due 
date.  In  such  cases  the  rate  to  be  allowed  for  anticipated  pay- 
ments is  usually  agreed  upon  in  advance  between  shipper  and 
consignee,  although  in  the  Far  East  usually  the  "rates  of  re- 


separate  from  the  interest  charge  involved  in  the  period  for 
which  a  draft  may  run  and  for  the  time  involved  in  getting 
draft  through  to  point  on  which  drawn  and  for  returning  pro- 
ceeds from  such  point  to  place  of  origin.     What  such  interest 


FINANCING  FOREIGN  BUSINESS  491 

may  amount  to  may  be  illustrated  in  taking  the  usual  form  of 
draft  on  so  important  a  South  American  market  as  Buenos 
Aires.  Drafts  on  that  city  are  usually  drawn  at  ninety  days' 
sight.  If  drawn  in  dollars  and  remittance  be  made  direct  to 
New  York,  bankers  nnist  calculate  interest  for  the  ninety-day 
term  of  the  draft  plus  thirty  days'  mail  time  New  York  to 
Buenos  Aires  and  thirty  days'  return  time,  or  five  months  in  all. 

Interest  charges,  or,  when  amounts  in  dollars  are  converted 
into  foreign  currencies,  rates  of  exchange  which  we  may  regard 
as  practically  the  same  as  interest  charges,  are  usually  figured 
by  bankers  and  quoted  by  them  to  shippers  on  application. 
The  advantage  often  found  in  drawing  in  foreign  currencies, 
making  conversion  at  rates  named  by  bankers,  is  that  interest 
like  other  bank  charges  is  covered  up  in  the  rate  of  exchange 
that  is  named.^  Otherwise,  if  bills  are  drawn  in  American  dol- 
lars, to  realize  the  face  value  of  the  invoice  without  deduction, 
it  is  necessary  to  add  and  specify  the  bank  rate  of  interest  or 
discount  and  its  charges.  This  sometimes,  especially  with  small 
and  inexperienced  importers  abroad,  creates  suspicion  and 
opposition,  althou-gh  a  recognized  and  established  custom. 

But  it  is  clear  that  if  a  manufacturer's  invoice  amounts  to 
$1,000  he  cannot  draw  simply  for  $1,000  and  avoid  suffering  the 
loss  of  interest  and  collection  charges.  He  must  draw  for  such 
an  amount  as  will  cover  both  the  face  of  the  invoice  and  these 
charges.  Some  one  must  pay  for  them,  and  unless  their  sum  be 
included  in  the  amount  for  which  the  draft  is  made  there  is  no 
way  of  collecting  them  from  consignees. 

Modifying  Clauses. — A  variety  of  clauses  may  be  included  in 
the  text  of  foreign  bills  of  exchange  as  required  by  custom  or 
local  conditions  in  countries  where  payable.  The  most  usual  of 
these  clauses  are  the  following:  That  known  as  the  Colonial 
clause,  included  in  drafts  drawn  on  South  African  and  Australa- 
sian points.-     This  reads,  "Payable  with  exchange  (English  and 

1  A  concrete  example  may  make  this  clearer.  If  the  demand  rate  on 
London  in  normal  times  is  4.Sfl,  a  bill  at  00  days'  sight  would  seem  to  he 
worth  a  trifle  less  than  4.S2,  figuring  interest  for  On  days  at  5  per  cent. 
pt?r  annum.  Bankers  would  prohal)ly  quote  4.81%,  the  margin  covering 
English  bill-stamp,  postage  and  commission.  Interest  may  run  from  3  to 
6  per  cent.,  according  to  market  and  various  conditions. 

2  See  Form  37.  Some  banks  prefer  the  clause  to  read  for  South  Africa: 
"At  Exchange  as  per  Endorsement." 


492  PRACTICAL  EXPORTING 

Colonial  stamps  added)  at  the  current  rate  in  London  for  nego- 
tiating bills  on  the  Colonies."  This  clause  makes  such  drafts 
subject  to  the  ruling  rates  of  exchange  as  between  New  York 
and  London,  eliminating  all  other  considerations  for  local 
charges,  interests,  etc.  These  bills  are  passed  by  New  York 
bankers  to  London,  not  to  Australian  or  South  African,  banks. 
The  exchange  (i.e.  interest,  etc.)  between  London  and  the  Colo- 
nies is,  with  other  incidentals,  charged  to  drawees.  In  New 
York  the  exchange  between  New  York  and  London  only  is  cal- 
culated. "When  thus  drawn  these  bills  have  usually  been  prime 
favorites  among  New  York  foreign  exchange  bankers.  However, 
during  the  war  and  owing  to  the  unprecedented  rates  for  Lon- 
don exchange,  it  became  a  serious  problem  with  Australasian  im- 
porters of  American  goods  how  most  cheaply  to  have  drafts 
drawn. 

Drafts  drawn  on  most  parts  of  South  America  (practically 
all  of  South  America  south  of  the  Equator)  are  usually  in  one 
of  two  forms.^  (1)  Drawn  in  dollars,  United  States  currency, 
reading  "Payable  in  legal  currenc}^  at  the  bank's  drawing  rate 
on  day  of  payment  for  sight  bills  on  New  York,"  or,  (2)  Drawn 
in  pounds  sterling,  reading  "Payable  in  legal  currency  at  the 
bank's  drawing  rate  on  day  of  payment  for  ninety  days'  sight 
bills  on  London."  In  the  first  instance — i.e.,  drafts  drawn  in 
dollars — interest  charges,  bank  commissions,  etc.,  should  be  in- 
cluded in  the  face  amount  of  the  draft  if  the  drawer  expects  to 
recover  the  amount  of  his  invoice  in  full  without  deduction.^  In 
the  second  instance — bills  drawn  in  sterling — interest,  commis- 
sions, etc.,  are  included  in  the  rate  of  exchange  named  by  bank- 
ers for  the  bills  in  question  and  payment  by  bill  on  London  is 
arranged  by  drawees  with  their  local  banks  as  ruling  conditions 
may  make  possible,  "Dollar  exchange,"  owing  to  the  financial 
developments  of  the  war,  came  into  favor  with  startling  sudden- 
ness. 

Another  clause  sometimes  included  in  drafts  may  read  after 
the  following  fashion:  "Payable  with  interest  at  6  per  cent, 
per  annum  from  date  of  draft  to  approximate  date  of  receipt  of 

1  See  Forms  35  and  30. 

2  This  can  only  be  done  after  previous  and  the  fullest  possible  mutual 
understanding  with  customers  has  been  arranged. 


T^^R^ 


•V3d 


NOS  ^  HJLIP^S  NHOP 


FINANCING  FOREIGN  BUSINESS 


493 


hitherto  been  one  advantage  in  drawing  in  sterling — the  most 

1  See  Form  38. 

2  Because  of  frauds  brought  to  Ught  in  conneetion  with  certain  fictitious 
cotton  bills  of  lading,  some  New  York  bankers  object  to  notation  on  drafts 
above  indicated. 


r*C;'> 


r^^ 


Payable  wttn  exchange,  a 

the  rate  of  _  6,        -   oe    arTn. 
^'^-i: — A-^^^—^af  Issue  to  aoprox.mate  a.»  , 


^^ 


»!?.> 


',    o 


^1 


FINANCING  FOREIGN  BUSINESS  493 

proceeds  in  (New  York)."  This  is  sometimes  employed  in 
drafts  on  the  Far  East,  the  British  West  Indies  and  other  mar- 
kets where  it  is  impossible  to  calculate  the  exact  term  for  which 
interest  ought  to  be  tig'ured.^  There  is  an  element  of  great  un- 
certainty about  it,  and  a  great  many  foreign  houses  object  to 
this  practice,  in  fact,  object  to  paying  more  than  charges  specif- 
ically named  by  invoices.  The  clause  in  question,  therefore, 
should  not  be  included  except  by  previous  agreement  with  the 
customers. 

It  should  be  noted  that  what  has  above  been  called  the  Colonial 
clause,  used  in  transactions  with  South  African  and  Australa- 
sian houses,  should  not  be  extended  to  other  markets.  In  some 
countries,  for  example,  in  the  Argentine  Republic,  it  is  under- 
stood that  it  is  illegal  to  require  payment  of  a  draft  in  larger 
amount  than  the  sum  indicated  on  its  face. 

For  the  sake  of  definiteness  as  identifying  a  foreign  draft  with 
a  given  transaction,  it  is  often  desirable  to  modify  the  customary 
phrase  "value  received"  by  making  it  read  "Value  received  in 

goods  per  S.  S.  ,"  or  it  may  be  made  still  more  specific  by 

indicating,  for  example,  "500  bales  of  cotton  ex  S.  S. ."^ 

Exchange  Payable  by  Drawee. — Reference  to  the  customary 
terms  of  payment  by  drawees  in  case  of  South  American  drafts 
prompts  an  explanation  of  what  is  expected  of  drawees  when 
drafts  are  drawn  against  them  payable  in  some  other  currency 
than  their  own.  A  drawee  in  Brazil  or  in  Russia,  for  example, 
cannot  always,  of  course,  tender  to  the  presenting  bank  the 
amount  of  his  indebtedness,  as  represented  by  the  draft,  in 
American  gold  dollars  or  in  British  pounds  sterling.  He  has  to 
pay  in  his  own  currency  such  an  amount  as  the  banker  will  ac- 
cept as  the  equivalent  of  the  amount  named  in  dollars  or  pounds. 
Unless  specifically  indicated  by  such  expressions  as  those  above 
noted  as  customary  in  South  American  bills,  the  rates  at  which 
drawees  must  pay  are  usually  dictated  by  the  presenting  bankers, 
based  on  locally  ruling  rates  of  such  foreign  exchange.  This  has 
hitherto  been  one  advantage  in  drawing  in  sterling — the  most 

1  See  Form  38. 

2  Because  of  frauds  brought  to  liglit  in  connection  witli  certain  fictitious 
cotton  bills  of  lading,  some  New  York  bankers  object  to  notation  on  drafts 
above  indicated. 


494  PRACTICAL  EXPORTING 

common,  stable  and  economical  exchange.  A  rate  of  exchange 
may,  however,  sometimes  be  indicated  in  the  draft  itself,  always 
by  prearrangement  with  drawee.  The  privilege  of  paying  in 
the  currency  in  which  the  draft  is  drawn  is  sometimes  granted, 
i.e.  of  paying  by  approved  counter  draft  in  such  currency. 

When  a  fixed  rate  of  exchange  is  indicated  in  the  draft  bank- 
ers themselves  are  relieved  from  any  uncertainty,  and  the  cus- 
tomer knows  that  on  the  due  date  of  the  bill  in  question  he  will 
be  required  to  pay  in  gold  (not  paper,  or,  if  in  paper,  at  an  en- 
hanced rate  to  cover  the  difference  between  gold  and  paper 
money)  the  cost  of  the  bill  at  the  rate  of  exchange  indicated. 

Foreign  Exchange  Brokers. — There  exists  in  New  York  quite 
an  important  body  of  men  engaged  in  the  foreign  exchange  busi- 
ness who  are  not  bankers,  who  do  not  carry  any  accounts  with 
foreign  bankers,  but  who  are  merely  "brokers"  in  foreign  ex- 
change, buying  and  selling  foreign  drafts  from  and  to  bankers 
for  account  of  commercial  houses,  as  a  stock  broker  buys  and 
sells  shares  of  stock. 

Included  in  this  class  there  are  a  number  of  firms  having  very 
considerable  capital,  who  buy  and  carry  bills  for  their  own  ac- 
count when  they  think  that  the  market  is  favorable  for  such  op- 
erations, but  by  far  the  great  majority  of  these  houses  are  small 
and  do  business  merely  on  a  straight  brokerage  basis. 

Neither  dealer  nor  broker  is  of  particular  interest  to  the  small 
or  occasional  exporter.  Both  may  be  of  great  importance  to 
large  and  regular  exporters.  Probably  most  export  commission 
ihouses  in  New  York  of  any  importance  at  all  sell  their  foreign 
drafts  through  some  broker  who  is  employed  for  that  purpose 
and  who  is  paid  a  small  fraction  of  1  per  cent,  commission 
by  the  sellers.  An  important  part  of  their  work,  too,  is  acting 
as  intermediaries  between  bankers  in  buying  and  selling  bills  as 
required  for  their  foreign  balances.  A  large  exporter  making 
shipments  every  week  or  several  times  a  week  usually  collects 
his  foreign  bills  of  exchange  on  days  prior  to  foreign  mail  days 
and  gives  a  memorandum  of  what  he  has  to  offer,  say  on  Tues- 
days and  Fridays,  to  his  broker  who  takes  this  memorandum  into 
"the  street,"  proceeds  from  banking  house  to  banking  house  ex- 
plaining what  his  principals  have  to  sell  and  securing  the  best 
available  bids. 


FINAM'IXG  FOREIGN  BUSINESS  495 

How  Exchange  Brokers  Work. — The  broker's  principals,  the 
exporters,  may  on  a  given  day  liave,  for  example,  a  draft  on 
Australia  for  $5,000,  a  draft  on  Loudon  for  $2,000,  a  draft  on 
Italy  for  $10,000,  a  draft  on  Egypt  for  $500,  a  draft  on  Buenos 
Aires  for  $1,000,  etc.  The  broker  will  probably  find  a  number 
of  foreign  exchange  bankers  willing  to  make  good  offers  for  the 
London  and  Australian  bills,  but  those  bankers  may  not  offer  as 
good  prices  for  the  Italian  or  Buenos  Aires  bills  as  will  some 
other  bankers  who  do  not  care  for  those  first  named,  while  a 
good  deal  of  difficulty  may  be  found  in  finding  the  banker  who  is 
willing  to  accept  on  satisfactory  terms  the. $500  bill  on  Egypt. 
The  broker,  in  due  course,  reports  back  to  the  exporter  the  sev- 
eral offers  which  he  has  obtained,  the  drafts  are  made  out  in  ac- 
cordance with  the  rates  offered,  and  are  then  taken  to  the  bank- 
ers whose  offers  have  been  accepted  together  with  all  the  neces- 
sary documents — of  course,  all  in  ample  time  to  catch  the  out- 
going mails. 

Foreign  exchange  brokers  who  are  thus  found  of  great  advan- 
tage by  large  exporters  may  sometimes  arrange  to  take  care  of 
the  occasional  drafts  of  smaller  or  of  inland  shippers.  They 
negotiate  sales,  rates,  etc.  The  documents  should,  as  a  rule,  be 
passed  directly  to  the  bankers  to  whom  sales  have  been  made. 
Brokers  do  not  usually  handle  the  actual  drafts,  bills  of  lading, 
and  other  papers. 

It  is  these  brokers,  or  the  larger  operators  among  them,  that  is 
those  who  handle  the  big  financial  bills,  who  virtually  "make 
the  market"  in  foreign  exchange  day  by  day.  Beginning  with 
the  opening  of  business  in  the  morning  they  consult  with  the 
larger  bankers,  learn  what  they  have  to  offer  on  that  day  and  at 
what  rates  they  are  disposed  to  buy  and  sell.  These  brokers' 
reports,  voluntary,  or  in  reply  to  enquiries,  indicate  the  fluctua- 
tions in  the  various  foreign  exchanges  from  hour  to  hour. 


CHAPTER  XV 

CREDITS,  ACCEPTANCES  AND  COLLECTIONS 

Credit  to  Foreign  Customers  May  be  Extended  on  Drafts  While 
Shippers  Secure  Cash — How  Drafts  Are  '' Accepted"  by  Cus- 
tomers— Advantage  and  Security  of  Acceptances — Principles 
and  Rates  of  Foreign  Exchange — Facilities  of  Discount  Mar- 
kets— Ways  of  Collecting  Past  Due  Foreign  Accounts. 

WHAT  happens  when  goods  and  drafts  reach  point  of 
destination  and  both  are  in  the  custody  of  bankers? 
The  latter 's  first  care  is,  of  course,  to  scrutinize  the 
documents  he  has  received.  Probably  but  one  set  of  these  docu- 
ments arrives  at  first,  for  the  transmitting  bankers  will  have  for- 
warded a  single  bill  of  lading  attached  to  "First  of  Exchange" 
and  a  duplicate  bill  of  lading  will  follow  by  later  mail  attached 
to  "Second  of  Exchange."  It  is  customary,  however,  for  bank- 
ers in  transmitting  documents  abroad  to  certify  that  they  have 
received  a  full  set  of  documents  and  have  attached  same  to  vari- 
ous copies  of  the  drafts.  Such  a  certificate  may  read  something 
like  this:  "All  negotiable  copies  of  the  bill  of  lading  relating 
to  this  bill  have  been  received  and  will  be  forwarded  by  follow- 
ing mails." 

BANKERS'  RELATIONS  WITH  CONSIGNEES 

When  satisfied  that  it  has  received  or  will  receive  all  necessary 
documents  in  connection  with  a  given  shipment  the  local  banker 
abroad  presents  drafts  to  drawees.  A  draft  drawn  at  sight  is 
nominally  payable  on  presentation,  but  (as  we  have  noted)  there 
are  comparatively  few  of  the  world's  markets  where  this  rule  is 
strictly  followed.  Probably  in  most  countries,  outside  of  the 
United  States  and  Europe,  even  a  draft  nominally  payable  at 
sight  is  held  by  bankers  until  the  arrival  of  goods.  The  facility 
of  examining  goods  before  paying  or  promising  to  pay  is  often 
claimed  by  importers. 

496 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      497 

Examination  of  Goods  Before  Payment. — Theoretically,  ev- 
ery buyer  has  a  right  to  examine  goods  before  pajdng  for  them. 
No  buyer  can  be  compelled  to  accept  and  pay  for  goods  he  has 
never  seen.  It  is  expected  that  such  an  examination  will  be 
made  in  a  convenient  way  that  will  not  interfere  with  the  car- 
rier's business  or  with  that  of  others  in  whose  possession  the 
goods  may  be.  The  buyer  cannot  be  expected  to  know  what  sort 
of  goods  have  arrived  or  whether  they  are  the  same  goods  that 
have  been  invoiced  to  him  without  such  right  of  inspection. 

It  is  not  necessary,  although  allowable,  to  give  instructions  to 
bankers  or  carriers  to  permit  inspection  of  this  sort,  as  is  some- 
times requested  by  foreign  clients  who  probably  in  such  cases 
are  not  very  familiar  with  technicalities  of  importing  from 
abroad.  However,  in  practice  such  right  of  inspection  is  seldom 
or  never  taken  advantage  of,  because  confidence  is  reposed  in  the 
character  and  reputation  of  the  shipper,  and  it  is  assumed  that 
if  errors  have  been  made  they  will  be  cheerfully  and  promptly 
rectified  by  the  shippers,  or  if  goods  have  been  pilfered  or  have 
suffered  damage  in  transit,  losses  so  involved  will  be  recovered 
in  due  course  from  the  insurance  companies  or  the  carriers, 
wherever  the  liability  may  attach.  Reclamations  of  this  sort  are 
recognized  as  inseparable  from  the  importing 'business. 

"Documents  for  Acceptance." — Drafts  drawn  at  certain 
periods  of  time  after  sight  or  after  date  are  usually  subject  to 
instructions  to  bankers  to  deliver  documents  against  acceptance 
(D.A.).  Even  such  bills,  however,  may  be  drawn  subject  to  de- 
livery of  documents  only  against  payment  (D.P.).  Drawing  in 
the  latter  fashion  (D.P.)  is  intended  to  give  ample  leeway  of 
time  for  the  arrival  of  slower  freight  vessels  and  necessitate  pay- 
ment by  consignee  only  at  about  the  time  goods  will  reach  him. 
From  what  has  just  above  been  remarked  it  is  evident  that  in 
but  few  of  the  world's  markets  is  it  necessary  to  take  this  pre- 
caution because  of  the  established  custom  of  bankers  in  holding 
sight  bills  for  the  actual  arrival  of  the  goods.  Drafts  at  a  stated 
length  of  time,  usually  after  sight,  "documents  for  payment," 
do  not  permit  the  turning  over  to  the  customer  of  the  bill  of 
lading  until  actual  payment  has  been  made. 

Drafts  forwarded  with  instructions  "documents  for  accept- 
ance" give  actual  possession  of  the  goods  as  soon  as  drawee  has 


498  PRACTICAL  EXPORTING 

"accepted"  the  bill.  If  the  consignee  settles  his  indebtedness 
to  the  satisfaction  of  the  presenting  bank  in  cash  or  by  accept- 
ance, in  accord  with  instructions  received  from  the  drawers  of 
such  drafts,  then  he  becomes  the  immediate  possessor  of  the  mer- 
chandise involved  through  receipt  of  the  bills  of  lading. 

The  consignee  may,  however,  arrange  credit  terms  with  the 
local  presenting  bank.  For  example,  he  may  arrange  with  the 
bank  to  put  the  goods  into  a  storage  warehouse  as  the  banker's 
property  and  withdraw  portions  of  the  shipment  as  he  may  sell 
them  or  otherwise  be  able  to  pay  for  them,  such  payments  in  in- 
stalments being  credited  against  his  total  indebtedness  for  the 
consignment  in  question.  This  is  frequently  done  in  the  Far 
East  where  all  bankers  maintain  what  they  call  "go-downs" 
where  goods  are  warehoused  and  deliveries  of  goods  to  customers 
made  as  occasion  warrants.  This  is  a  practice,  too,  which  pre- 
vails generally,  in  New  York  as  elsewhere,  in  the  case  of  impor- 
tations under  letters  of  credit  issued  by  bankers  at  the  solicita- 
tion of  importers.  Such  letters  of  credit  are  not  often  paid  for 
in  cash,  but  are  issued  by  bankers  on  their  faith  in  the  solvency 
of  the  importer,  plus  the  security  the  banks  will  have  in  the 
possession  of  the  bills  of  lading. 

When  an  importation  is  made  under  such  letter  of  credit  the 
documents  may  be  turned  over  to  the  importer,  who  has  not  paid 
a  cent  thus  far  on  account,  upon  his  signature  to  a  "trust  re- 
ceipt." How-ever,  usually  the  banker  will  himself  take  charge 
of  the  merchandise,  put  it  in  storage  and  parcel  it  out  as  it  is 
actually  sold  and  paid  for  by  the  importer.  These  are  matters 
of  individual  arrangement  between  bankers  abroad  and  their 
local  customers  and  must  evidently  be  influenced  by  the  credit 
standing  of  the  importer  and  the  relations  maintained  between 
him  and  his  bankers.  These  considerations  in  no  wiS'e  affect 
the  American  shipper.     His  credit  problem  is  of  another  nature. 

HOW  CREDIT  IS  EXTENDED  ON  DRAFTS 

"How  to  have  one's  cake  and  eat  it,  too,"  is  usually  a  prob- 
lem of  some  complexity.  In  international  trading  it  is  solved 
to  some  extent  through  the  long  established  practice  of  bankers 
in  buying,  i.e.,  of  advancing  cash  against  documentary  drafts. 
The  shipper's  responsibility  usually  remains,  it  is  true,  but  the 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      499 

interesting  fact  stands  out  that  if  the  shipper  is  financially 
sound,  or  at  least  well  reported  by  the  agencies,  he  can  get  cash 
in  full  or  nearly  in  full  for  such  of  his  products  as  he  exports, 
while  his  foreign  customers  may  not  have  to  pay  for  his  goods 
for  some  time  after  they  have  been  received. 

Bankers  enter  the  foreign  exchange  business  for  the  express 
purpose  of  dealing  in  commercial  and  other  bills  of  exchange 
with  accompanying  documents.  The  profits  in  that  business  are 
attractive.  Bankers  advance  the  money  which  shippers  wish  to 
realize  quickly.  They  carry  the  shipper's  customers  for  the 
agreed  upon  time.  This  is  the  true  basis  of  credit  in  interna- 
tional business  of  ordinary  character  and  volume.  The  big  in- 
ternational business  in  cotton,  grain,  coal,  lumber,  shipments  of 
scores  of  thousands  of  dollars'  worth  at  a  time,  is  thus  financed 
(and  credit  given  in  normal  times),  while  by  long  odds  the 
greatest  share  in  our  exports  of  miscellaneous  goods  follows  the 
same  course — for  example,  almost  the  whole  business  of  most 
export  commission  houses  in  normal  times. 

This,  however,  is  not  to  be  confounded  with  certain  other 
aspects  of  enterprise  in  foreign  lands.  A  steamship  company 
wishes  to  have  a  vessel  built,  a  railway  company  wants  to  ex- 
tend its  lines  or  add  new  equipment,  a  municipality  is  anxious 
to  electrify  its  tramway  system,  a  local  company  is  ambitious  to 
build  a  big,  new  hydro-electric  plant — these  are  enterprises  dif- 
fering radically  from  ordinary  commerce.  Governments,  Mu- 
nicipalities, Public  Utility  corjDorations  may  pay  the  suppliers 
of  the  equipment  required  in  bonds  issued  to  finance  the  project, 
or  on  such  other  terms  as  those  suppliers  may  be  induced  to  ac- 
cept. Credit  in  such  cases  is  not  comparable  to  anything  usual 
or  desirable  in  the  waj^  of  ordinary  business.  It  is  only  in  the 
latter  regard  that  we  are  now  concerned. 

It  is  not  too  much  to  say  that  the  granting  of  more  attractive 
terms  than  cash  before  shipment  of  goods  will  easily  influence 
a  50  per  cent,  increase  in  any  manufacturer's  foreign  business. 

Credit  on  Sig-ht  Drafts. — No  credit  is  extended,  or  is  sup- 
posed to  be  extended,  when  a  sight  draft  is  drawn  against  a  for- 
eign customer.  Shipments  subject  to  such  terms  are  not  deliv- 
ered to  buyers  until  drafts  are  paid  and  a  draft  at  siglit  is  ex- 
pected to  be  paid  just  as  soon  after  its  arrival  at  destination  as 


500  PRACTICAL  EXPORTING 

receiving  bankers  can  present  it  to  drawee.  As  a  matter  of  fact, 
however,  and  as  has  been  already  noted,  even  sight  drafts  are  in 
many  other  countries  frequently  held  awaiting  actual  arrival 
of  steamer  bringing  the  goods.  But  in  any  case  a  sight  draft  is 
in  principle  a  C.O.D,  transaction. 

This  is  true  even  when  in  some  countries  time  allowed  to  cus- 
tomers against  whom  sight  drafts  have  been  drawn  may  extend 
for  months  after  the  arrival  of  goods.  For  example,  when  im- 
porters have  no  need  for  the  shipping  papers  until  the  goods 
have  been  cleared  through  the  custom  house  and  clearance  may 
be  delayed  either  by  officials  or  by  the  importer  himself.  Par- 
ticularly in  South  America,  in  countries  where  customs  duties 
are  paid  in  gold,  if  the  price  of  gold  is  high  the  importer  may 
leave  the  goods  in  the  custom  house  an  indefinite  length  of 
time  awaiting  a  fall  in  the  price  of  gold,  M'hile  bankers  wait 
complaisantly,  either  because  of  competition  or  because  forced 
by  long  established  local  ciLstom.  Still  the  importer  is  not  given 
possession  of  his  goods  until  he  pays  the  draft.  This  holding 
of  sight  drafts  is  a  serious  abuse  in  banking  practice. 

Credit  on  Time  Drafts. — Time  drafts  are  those  drawn  at  30 
days,  60  days,  90  days,  4  months,  6  months  or  some  other  period 
after  sight,  that  is,  after  the  day  when  such  drafts  have  been 
presented  to  consignees,  or  they  may  be  drawn  after  date  of 
draft.  Credit  in  international  trade  is  in  the  great  majority  of 
instances  based  on  acceptances  of  such  drafts.  The  draft  when 
accepted  becomes  the  equivalent  of  a  promissory  note,  but  it  has 
the  additional  character  of  bearing  on  its  face  evidence  of  cov- 
ering a  legitimate  and  undisputed  business  transaction.  With 
the  delivery  of  the  bills  of  lading  upon  his  acceptance  of  a  time 
draft  the  extension  of  actual  credit  to  the  customer  begins. 

Nature  of  Acceptances. — When  a  bill  is  presented  to  the 
drawee  for  acceptance  if  on  presentation  he  agrees  to  its  condi- 
tions, he  signifies  his  assent  in  writing,  usually  across  the  face 
of  the  bill,  the  word  "accepted"  and  signing  his  name,  but  when 
a  bill  is  drawn  "after  sight"  the  date  of  acceptance  must  also 
be  inserted,  for  it  is  this  date  that  gives  life  to  the  bill.^ 

One  important  feature  of  the  acceptance  of  a  draft  by  the 
customer  is  the  fact  that  it  forms  an  acknowledgment  of  indebt- 

i  See  Form  39. 


i^i»^.^./^.-«:a.aa«i^a^ 


ninety  daye  after 


^OlAT«l4ZUl^  Ohio, 


-SIGHT  OF    THIS  FIRST 
paid)  pay  to  the  order  of  the  ANGLO-SOUTH    AMERICAN  BANK.  LIMITED. 

ence 


iVS-EGALfTcai^NCY     AT      THE     BANK'S     DRAWING     RATE     ON     DAY     OF     PAYMENT      FOR 
lAYS    sh^H^J^BI^S  ON    LONDON.    VALUE    RECEIVED    IN    GOODS     PER    S.S."Celln" 


TO   ^  floroorw'p  R  Sanchez 


sSLoh 


Valpara.iAn,nhnB. 


HENRY  M.  E.LAGG.  INC. 


Form  39 — Draft  Bearing  "Acceptance.' 


c 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      501 

edness  which  it  is  then  unnecessary  to  prove  item  by  item  in  the 
case  of  litigation.  In  most  cases  acceptances  are  far  simpler  to 
collect  judicially  than  open  accounts. 

It  must  not  be  forgotten  that  it  is  always  essential  that  a  full 
and  complete  understanding  be  arrived  at  with  foreign  custom- 
ers as  to  the  form  of  draft  that  shall  be  drawn  and  its  terms. 
Such  understandings  vary,  of  course,  according  to  the  char- 
acter of  the  customer  involved  and  to  some  extent  according  to 
the  risk  as  a  whole.  Thus,  it  is  often  the  custom  of  large 
English  shippers  to  exact  definite  agreements  from  some  if  not 
all  of  their  foreign  customers  as  to  protection  for  their  drafts. 
One  contract  order  form  which  is  prescribed  by  British  ex- 
porters, after  instructions  as  to  how  a  draft  shall  be  drawn — 
for  example,  at  sixty  days '  sight — involves  their  customers  in  the 
following  undertaking:  "which  we  hereby  bind  ourselves  to  ac- 
cept immediately  on  presentation  and  to  pay  at  maturity,  or  if 
not  then  to  suffer  all  losses  and  expenses  arising  from  failure  to 
do  so  and  from  a  sale  of  said  goods  to  be  effected  by  you  on  our 
account  and  risk." 

Legal  Status  of  Accepted  Drafts. — When  a  draft  is  accepted 
by  a  good  house  (with, emphasis  on  good)  it  may  almost  be  re- 
garded as  insurance  of  due  payment  at  maturity,  since  an  ac- 
cepted draft  is  in  all  countries  looked  upon  as  a  debt  of  honor 
because  the  signature  has  been  given.  The  paper  becomes  val- 
uable as  a  promise  to  pay,  so  that  in  any  court  such  an  accept- 
ance figures  as  a  distinct  obligation  on  the  part  of  the  acceptor, 
and  in  some  countries  it  takes  precedence  of  all  other  debts  not 
guaranteed  in  this  way.  Besides  this,  uncertainty  is  eliminated 
in  cases  where  bad  trade,  revolutions,  disturbances,  earthquakes 
or  fluctuations  in  exchange  might  otherwise  incline  the  debtor  to 
postpone  payment.  Very  often  also,  when  legal  procedure  be- 
comes necessary,  courts  are  prepared  in  many  countries  to  admit 
a  draft  bearing  the  signature  of  the  drawee,  that  is  accepted  by 
him,  as  sufficient  prima  facie  evidence  of  the  indebtedness  of 
the  drawee,  because  an  acceptance  constitutes  the  most  definite 
recognition  of  liability  on  the  part  of  a  debtor.  It  is  a  volun- 
tary acknowledgment  of  such  debt,  whereas  there  may  be  a  vast 
deal  of  bother,  if  not  difficulty,  in  getting  a  court  to  recognize 
such  indebtedness  when  it  can  only  be  proved  by  invoices  and 


502  PRACTICAL  EXPORTING 

accounts  current,  even  when  those  invoices  have  been  legalized 
by  the  consul  of  the  respective  country. 

Arranging  Long  Terms. — When  a  manufacturer  or  other 
shipper  is  disposed  to  carry  foreign  credits  on  his  own  account, 
without  seeking  advances  of  cash  from  bankers  against  ship- 
ments as  they  are  made,  it  is,  of  course,  possible  to  make  such 
terms,  against  acceptances  or  otherwise,  as  may  seem  good  and 
proper.  But  there  are  few  manufacturers  in  a  position  to  do 
more  than  a  limited  export  business  on  this  basis.  Most  people 
who  believe  that  export  trade  is  worth  having  are  anxious  to  get 
as  much  of  it  as  possible,  and  in  order  to  develop  it  in  adequate 
measure  they  are  obliged  to  have  recourse  to  bankers  who,  in- 
deed, as  has  been  pointed  out,  are  really  established  for  the  pur- 
pose of  extending  such  assistance  and  profiting  thereby.  No 
hesitation  need  be  felt  by  any  manufacturer  in  seeking  to  utilize 
banking  facilities  in  this  direction. 

However,  in  buying  foreign  documentary  drafts  foreign, ex- 
change bankers  are  rarely  willing  to  negotiate  documents  drawn 
at  more  than  ninety  days  after  sight,  at  least  unless  they  are 
holders  of  approved  letters  of  credit  authorizing  longer  terms. 
Incidentally,  it  may  be  remarked  that  banking  practices,  with 
the  development  of  our  American  discount  markets,  will  prob- 
ably become  more  generous  as  to  terms  which  are  acceptable. 
It  may  also  once  more  be  repeated  that  while  the  term  "sale"  or 
"discount"  of  foreign  drafts  is  here  used  in  the  common,  collo- 
quial way,  the  operation  is  not  properly  described  by  those 
words ;  it  is  purely  a  loan  against  hypothecation  of  securities. 

It  has  already  been  argued  that  ninety  days  credit,  that  is, 
credit  against  acceptance  of  a  ninety-day  draft,  is  and  should  be 
all  that  need  usually  be  extended  by  any  American  shipper  to 
thoroughl}^  good  and  responsible  foreign  customers.  However, 
it  is  not  to  be  denied  that  in  some  trades  longer  terms  may  be- 
come necessary  as  they  may  also  seem  desirable  with  some  cus- 
tomers. 

How  Drafts  May  Be  Extended. — There  are  several  ways  in 
which  longer  credits  may  be  arranged  in  this  country  and  sellers 
of  goods  still  enjoy  the  use  of  funds  advanced  by  bankers.  Thi!=; 
is  quite  often  done  by  renewing  drafts.  By  this  is  meant  that  if 
upon  approach  of  the  due  date  for  a  ninety-day  acceptance,  the 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      503 

foreign  customer  finds  that  it  will  not  be  convenient  for  him  to 
pay  it  at  that  time,  he  can  advise  the  shipper's  local  agent  or 
he  can  cable  direct  to  the  xVmericau  shipper.  The  latter  can 
then  arrange  with  the  bankers  to  whom  he  sold  the  original  bill 
to  cable  or  write  the  local  bankers  in  the  customer's  city  to 
avoid  protest.  The  American  house  can  then  forward  a  fresh 
draft  on  the  customer,  again  at  ninety  days'  sight,  if  necessary, 
to  be  substituted  for  the  first  one  wiien  the  customer  duly  ac- 
cepts the  second.  The  customer  will  thus  receive  on  the  two 
drafts  a  total  of  six  months'  credit.  Additional  and  sometimes 
considerable  charges  are  involved  in  following  this  procedure, 
including,  of  course,  extra  bank  charges  for  interest,  commis- 
sion, postage,  etc.,  and  probably  costs  of  cablegrams.  Such 
costs,  of  course,  must  be  borne  by  the  cvistomer. 

The  same  result  is  perhaps  secured  rather  more  frequently  in 
the  following  manner:  The  acceptor  of  a  draft  which  he  may 
not  wish  to  pay  on  due  date  may  draw  his  own  draft  against 
the  drawer  of  tlie  original  draft,  and  with  its  proceeds  take  up 
liis  own  obligation.  The  original  drawer  will  in  his  turn  re- 
draw against  original  drawee,  with  added  interest  and  costs  in- 
cluding commission,  postage  and  revenue  stamps,  etc. 

Naturally,  bankers  do  not  look  with  entire  approval  on 
methods  such  as  these.  It  is,  however,  sometimes  necessary  to 
follow  them,  and  when  bankers  are  on  suitably  intimate  terms 
with  shippers  little  difficulty  is  experienced  in  putting  through 
such  operations.  The  author  has  known  of  one  instance  where  a 
New  York  exporter  carried  drafts  amounting  to  something  like 
$60,000  for  almost  two  years'  time  by  similar  methods. 

Draft  Renewals  not  Always  Discreditable. — It  should  be 
noted  that  a  request  from  a  foreign  customer  that  an  accepted 
draft  be  extended  by  no  means  always  implies  that  the  customer 
is  in  financial  straits.  Such  a  request  is  frequently  made  from 
countries  enjoying  the  blessings  of  silver  or  paper  currency  be- 
cause exchange  rates  are  at  an  abnormally  low  figure.  If  no 
stated  rate  of  exchange  has  been  named  on  the  face  of  the  draft, 
or  agreed  upon  when  customer  gave  his  acceptance,  then  paying 
on  a  given  day  miglit  involve  needlessly  heavy  charges.  Again, 
in  many  parts  of  Latin  America  the  funds  of  some  of  the  larg- 
est importers  may  be  tied  up  in  extended  credits  to  agriculturists 


504  PRACTICAL  EXPORTING 

whose  payments  depend  on  the  crops.  Even  a  strong  and  rich 
importer  may  sometimes  be  disappointed  and  embarrassed  in 
his  local  collections  owing  to  backwardness  of  the  crops,  un- 
favorable weather  and  similar  conditions. 

Time  Granted  by  Series  of  Drafts. — Another  way  of  extend- 
ing credit  for  longer  periods  than  are  usually  covered  by  drafts 
which  bankers  are  willing  to  buy,  may  be  adopted  by  shippers 
who  are  willing  to  carry  a  part  of  an  account  for  a  portion  of 
the  credit  term  required.  Thus,  suppose  a  sale  to  be  made  on 
six  months'  time  and  arrangements  concluded  with  customer  to 
split  up  the  total  invoice  value  among  several  drafts,  each  to  be 
drawn  at  ninety  days'  sight.  There  may  be  two  drafts,  one  of 
which  at  ninety  days'  sight  the  shipper  would  cash  as  soon  as 
shipment  was  made,  and  the  other,  at  six  months'  sight,  he 
would  send  forward  for  acceptance,  to  be  then  returned  to  New 
York,  where  it  would  arrive  in  time  for  it  to  be  discounted 
ninety  days  prior  to  its  due  date.  This  would  involve  the  ship- 
per in  carrying  one-half  of  the  amount  for  half  the  period,  that 
is,  say  for  ninety  days,  the  other  half  being  advanced  by  the 
bankers  on  shipment.  Such  a  plan  is  susceptible  of  extension 
and  all  sorts  of  modifications.  Longer  time  may  be  covered  and 
the  amount  involved  divided  among  a  series  of  drafts  at  any 
desired  running  time,  one  at  3  months,  others  at  4,  6,  8  months, 
etc.,  each  being  discounted  with  bankers  at  such  period  prior  to 
maturity  as  bankers  are  willing  to  consider  in  negotiating  such 
bills.     (See  also  discussion  of  bankers  acceptances,  page  510.) 

COOPERATION  OF  BANKERS 

A  great  deal  of  advantage  may  be  found  by  American  ship- 
pers in  utilizing  commercial  letters  of  credit  in  some  ways  which 
do  not  at  first  suggest  themselves  to  the  uninitiated.  For  ex- 
ample, within  a  year  or  so  ago  a  ruling  of  the  Federal  Reserve 
Board  was  made  under  which  "an  American  merchant  de- 
siring ultimately  to  export  merchandise,  can  under  proper  ar- 
rangements with  his  banker,  draw  on  time  in  anticipation  of  the 
actual  export,  using  the  funds  in  the  purchase  or  preparation  of 
his  shipment  and,  when  ready  actually  to  export,  use  the  pro- 
ceeds of  the  drafts  that  he  draws  on  the  buyer  or  the  buyer's 
banker  in  liquidation  of  the  acceptance."^ 

1  J.  E.  Gardin,  when  Vice-President,  National  City  Bank  of  New  York. 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      505 

How  Letters  of  Credit  May  be  Utilized. — Another  way  in 
which  letters  of  credit  have  already  been  utilized  by  American 
shippers  is  described  by  Franklin  Escher,  author  of  "Elements 
of  Foreign  Exchange,"  in  articles  appearing  in  the  American 
Exporter,  from  which  the  following  may  be  condensed: 

"A  lot  of  agricultural  machinery,  we  will  say,  has  been  sold  in 
Buenos  Aires.  The  New  York  merchant  who  has  sold  the  ma- 
chinery goes  to  his  banker  and  asks  for  an  export  letter  of 
credit.  'We  have  sold  a  lot  of  machinery  down  there,'  he  says, 
'which  will  be  paid  for  within  thirty  daj^s  after  its  arrival.  In 
the  meantime  we  do  not  want  to  be  out  of  the  money.  Here  are 
the  bills  of  lading  made  over  to  yourself,  and  here  are  the 
invoices  and  all  the  necessary  papers.  Give  us  a  letter  of  credit 
so  that  we  can  get  our  money  at  once  on  this  shipment  and 
take  up  other  business.' 

' '  To  the  banker  this  is  an  attractive  proposition.  A  bona  fide 
trade  has  been  put  through ;  he  has  all  the  evidence  of  it  in  his 
own  hands.  He  knows  that  by  the  issue  of  an  export  letter 
of  credit,  he  can  cause  the  exporter  to  get  the  money  he  wants 
without  he  himself,  the  banker,  putting  up  any  actual  cash.  If 
the  exporter  be  allowed  to  draw  a  ninety-day  draft  on  the  New 
York  banker's  London  correspondent,  for  instance,  that  draft 
can  be  sold  for  dollars  in  the  New  York  exchange  market  and 
the  exporter  will  get  the  money  he  needs  at  once.  This  ninety- 
day  draft  drawn  by  the  exporter  will  be  'accepted'  upon  its 
arrival  in  London,  but  it  will  not  have  to  be  actually  paid  for 
ninety  days.  In  the  meantime  the  merchandise  will  have  been 
sent  to  South  America,  will  have  been  paid  for,  and  the  proceeds 
remitted  to  the  London  banker  on  whom  the  American  exporter 
drew  the  ninety  day  draft.  No  actual  cash  will  have  been  put 
up  by  either  banker  engaged  in  the  transaction.  The  bills  of 
lading  and  other  documents  are  turned  over  to  the  banker  who 
issues  the  credit  so  that  they  may  be  forwarded  by  him  to  his 
correspondent  in  Buenos  Aires,  who  will  attend  to  the  collection 
of  the  money  from  the  buyer  of  the  merchandise  in  that  place. 
This  money,  as  it  is  collected,  is  remitted,  not  back  to  New  York, 
but  to  the  banker  in  London  on  whom  the  export  letter  of  credit 
gives  the  American  shipper  a  right  to  draw." 

Advantages  of  London  to  American  Bankers. — London  has 


506  PRACTICAL  EXPORTING 

heretofore  been  brought  into  these  transactions  for  a  number  of 
reasons.  For  one,  because  until  the  passage  of  the  Federal  Re- 
serve Act,  National  Banks  in  the  United  States  were  not  al- 
lowed to  accept  time  drafts.  Another  reason  has  been  that  the 
New  York  bankers  have  not  wished  to  put  up  any  actual  money 
and  have  required  a  foreign  point  on  which  their  clients  might 
draw  long  bills.  For  such  bills,  issued  under  first  class  letters 
of  credit,  there  has  always  been  an  excellent  market  in  New 
York,  and  by  bringing  into  the  transaction  a  third  point,  such 
as  London  or  Paris,  the  bank  here  has  been  able  to  loan  its  credit 
and  keep  its  cash.  That  cash  has  ultimately  come  out  of  the 
great  discount  market  in  London,  which  -has  absorbed  drafts 
drawn  under  bankers'  credits.  When  ''accepted"  by  a  London 
banker  they  have  been  readily  discounted  in  that  market.  Some- 
thing of  this  sort  is  rapidly  developing  in  New  York.  American 
banking  and  discounting  practices  are  just  now  shaping  them- 
selves to  meet  new  conditions,  are  quite  dissimilar  from  those 
we  knew  prior  to  the  Great  War  or  during  it.  Improved  serv- 
ices and  greater  facilities  will  undoubtedly  result,  with  material 
assistance  to  exporters. 

However,  before  we  attempt  to  consider  this  vital  and  most 
interesting  matter,  we  shall  do  well  to  review  the  general  subject 
of  what  are  called  ' '  the  foreign  exchanges. ' ' 

PRINCIPLE  AND  RATES  OF  FOREIGN  EXCHANGE 

The  ground  work  on  which  the  system  of  foreign  exchange  rests 
and  for  which  it  was  originally  established  is  the  financing  of  in- 
ternational trade.  To  make  it  possible  for  the  exporter  to  con- 
vert his  drafts  into  francs  or  marks  or  pounds  sterling,  enabling 
his  foreign  customers  to  pay  for  the  goods  which  he  ships  them 
in  money  with  whicii  they  are  familiar,  at  the  same  time  obtain- 
ing for  himself  the  exact  equivalent  of  his  invoice  in  dollars, 
and,  on  the  other  hand,  to  make  it  possible  for  importers  who 
have  debts  to  pay  abroad  similarly  to  satisfy  such  indebtedness 
— these  are  the  many  functions  of  the  foreign  exchange  market. 

What  Governs  Rates  of  Exchange. — The  rate  of  exchange  is 
the  i)rice  given  in  one  country  for  the  money  of  another  coun- 
try. Tliese  rates  are  regulated  by  the  laws  of  supply  and  de- 
mand, which  in  turn  are  influenced  by  the  balance  of  trade  be- 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS       507 

tween  the  two  countries.  But  one  of  the  principal  factors  in 
determining  the  rate  of  exchange  in  normal  times  is  the  cost  of 
remitting  specie,  or  what  in  New  York  is  called  the  gold  ex- 
port point.  It  is  obvious  that  when  better  results  can  be  ob- 
tained by  shipping  specie  debtors  will  adopt  that  course,  in- 
convenient though  it  be,  in  preference  to  buying  bills.  When 
operating  in  exchange  a  merchant  does  not  trouble  to  inquire 
whether  exchange  is  above  or  below  par.  All  he  is  concerned 
with  is  the  actual  rate  of  exchange  for  the  day  and  whether  it 
is  likely  to  go  higher  or  lower. 

Different  rates  of  exchange,  as  quoted  on  a  given  day  by 
bankers  and  reported  in  the  newspapers,  represent  rates  ruling 
for  bills  of  different  qualities,  as  for  example  bankers'  bills,  that 
is  bills  drawn  on  concerns  whose  credit  is  beyond  dispute 
and  ordinary  commercial  bills  drawn  in  the  usual  course  of 
trade.  Different  prices  are,  of  course,  quoted  for  bills  payable 
at  sight,  and  those  payable  at  sixty  or  ninety  days  after  sight, 
since  the  interest  for  the  period  must  be  calculated. 

At  certain  times  of  the  year  when  a  country  like  the  Argentine 
or  the  United  States  is  harvesting  and  exporting  a  large  por- 
tion of  its  crops — for  example,  wheat,  corn  and  cotton — Euro- 
pean countries  may  have  large  paj^ments  to  make  to  those  coun- 
tries, without  such  payments  being  counterbalanced  at  the  mo- 
ment by  a  correspondingly  large  set  of  payments  to  Europe, 
speaking  now,  as  always,  of  international  trade  as  it  exists  in 
all  normal  years,  in  the  usual  commerce  of  all  countries  of  the 
world.  At  such  a  time,  the  demand  for  bills  will  be  light  as  com- 
pared with  the  offerings  and  the  rate  in  New  York  will  fall  until 
specie  point  is  reached  and  gold  imports  become  likely  At  an- 
other season  the  current  of  remittances  may  be  all  the  other 
way. 

Thus  the  law  of  supply  and  demand  governs  the  seasonal 
fluctuations  of  the  international  exchanges.  We  had  dur- 
ing the  war  an  extraordinary,  unprecedented  illustration  of  the 
principle  in  the  fall  in  value  on  the  New  York  market  of  pounds, 
francs,  lire,  roubles,  etc.,  chiefly  due  to  the  fact  that  the  great 
movement  of  trade  was  all  one  way — from  the  United  States  to 
Europe.  We  did  not  buy  values  in  Europe  to  offset  Europe's 
purchases  from  us.     To  this  major  cause  some  authorities  in- 


508  PRACTICAL  EXPORTING 

cline  to  add  actual  depreciation  in  national  currencies  in  Europe 
because  of  bond  issues,  depletion  of  reserves,  etc. 

So  far  as  international  indebtedness  is  concerned,  bills  of  ex- 
change constitute  a  sort  of  floating  currency.  One  bill  is  a 
record  of  a  debt  payable  by  say  a  London  merchant  to  one  in 
New  York  at  a  fixed  date ;  another  is  a  record  of  a  debt  payable 
by  a  New  York  merchant  to  one  in  London.  By  selling  these 
bills  to  bankers  the  transmission  of  gold  is  avoided,  and  only 
when  the  banks  have  not  sufficient  bills  on  one  country  to  set 
against  those  of  the  other,  and  cannot  buy  cheaply  enough  in 
their  monetary  centers  further  bills  payable  in  the  desired 
country,  does  it  become  necessary  to  ship  gold.  It  is  the  clear- 
ing house  principle. 

Paying  in  Specie  Instead  of  by  Bill  of  Exchange. — When  a 
merchant  in  one  country  purchases  goods  of  a  merchant  in  an- 
other, he  is,  in  the  ordinary  way,  under  the  obligation  of  paying 
over  to  the  seller  at  a  certain  date  so  much  gold  coin  in  the  cur- 
rency of  the  country  in  which  the  seller  resides.  How  is  he 
to  do  this  ?  Somehow  or  other  he  is  under  the  necessity  of  pur- 
chasing the  requisite  amount  of  foreign  gold  coin.  If  the  debtor 
could  not  purchase  a  bill  of  exchange  payable  in  the  country 
of  his  foreign  creditor  wherewith  he  could  liquidate  his  debt  he 
would  be  under  the  compulsion  of  purchasing  in  his  own  country 
foreign  gold  coin,  if  it  were  available,  or  the  exact  weight  equiva- 
lent in  some  form  of  gold  of  the  foreign  gold  coin.  In  that  case 
he  would  have  to  pay  over  and  above  the  actual  gold  equivalent 
of  his  debt  the  cost  of  carriage  and  insurance.  Consequently  if 
he  can  purchase  a  bill  of  exchange,  i.e.,  an  order  on  some  one  in 
the  city  or  the  country  of  his  creditor  to  pay  to  some  one  else 
there  the  amount  of  his  debt  in  local  foreign  coin,  it  will  be 
profitable  for  him  to  do  so,  so  long  as  it  does  not  cost  him  more 
than  sending  gold  over.  When,  however,  rates  at  which  such 
remittance  can  be  purchased  rise  above  a  certain  point  it  be- 
comes cheaper  to  ship  the  actual  gold.  When  this  point  is 
reached  gold  does  actually  leave  the  country,  not  that  the  debtor 
himself  actually  buys  gold  and  ships  it,  but  the  bankers  who 
constitute  the  market  in  these  foreign  exchanges  find  themselves 
under  the  necessity  of  exporting  gold.^ 

1  Adapted  from  Heelis,  "Tlieory  and  Practice  of  Commerce." 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      509 

In  the  case  of  each  country  the  "gold  points"  are  just  as 
much  higher  or  lower  than  the  par  of  exchange,  that  is  the  rela- 
tive actual  weight  of  gold  in  coins  of  different  countries,  as  is 
represented  by  the  cost  of  forwarding  and  insuring  gold  from 
one  center  to  another.^ 

A  DISCOUNT  MARKET  AND  ITS  FACILITIES'^ 

Since  the  establishment  of  the  Federal  Reserve  system  we  have 
heard  a  good  deal  about  the  advantages  of  a  discount  market 
and  the  chances  for  the  establishment  in  New  York  of  a  market 
of  this  description  comparable  with  that  of  London.  To  take 
advantage  of  any  such  discount  market  there  has  first  to  be  de- 
veloped the  system  of  acceptances,  and  particularly  bankers' 
acceptances,  which  long  ago  was  firmly  established  in  London, 
but  which  prior  to  the  present  Act  was  forbidden  to  National 
Banks  of  the  United  States.  The  Federal  Reserve  Act  permits 
National  Banks  to  accept  bills  involved  in  the  export  or  import 
of  merchandise. 

Advantage  of  the  facilities  offered  by  the  Federal  Reserve 
Act  was  quickly  recognized  and  to  a  very  large  extent  because 
of  many  enormous  financial  operations  growing  out  of  pur- 
chases of  war  supplies  in  this  country  ,especially  those  financed 
under  bankers'  letters  of  credit.  The  passage  of  the  Edge 
Act  (1919)  was  intended  as  a  further  assistance  to  exporters 
in  granting  long  term  foreign  credits,  that  is,  credits  running 
over  the  90  days  to  which  bankers  ordinarily  prefer  to  con- 
fine themselves.  Edge  Law  banks  do  both  accepting  of  foreign 
bills  of  exchange  and  discounting  of  such  bills. 

The  Acceptance  System. — Reduced  to  its  simplest  terras,  the 
acceptance  system  may  be  roughly  described  as  follows:  first, 
an  importer  of  goods  in  one  country  may  authorize  a  bank  in 
another  country  to  accept  drafts  drawn  for  the  account  of  the 
importer  covering  shipments  of  merchandise  which  he  orders 
from  that  country.     This  is   almost   always  arranged  by  the 

1  When  a  nation  is  involved  in  war  it  may  and  usually  does  prohibit  the 
export  of  gold,  perhaps  also  silver,  in  order  to  conserve  its  own  resources 
as  well  as  to  prevent  gold  from  reaching  its  enemies.  On  the  other  hand, 
enormous  exports  of  gold  to  creditor  nations  may  be  necessary  in  order  to 
maintain,  at  least,  approximately,  the  par  of  exchange.  We  have  had  il- 
lustrations of  both  courses  in  the  United  States. 


510  PRACTICAL  EXPORTING 

importer's  local  bank  with  its  corresponding  bank  in  the  ex- 
porter's country.  Second,  an  exporter  arranges  with  a  bank 
where  he  is  favorably  known  and  which  is  satisfied  as  to  his 
financial  responsibility  to  accept  drafts  which  he  may  draw  on 
that  bank,  no  credit  having  been  established  by  the  importers. 

Bankers  may  charge  all  the  way  from  one-eighth  to  five-eighths 
of  one  per  cent,  for  their  complaisance  in  accepting  such  bills 
drawn  against  them  and  to  cover  whatever  risks  may  be  in- 
volved in  so  doing.  The  bills  thus  accepted  by  a  known  and 
highly  responsible  banker  become  short  term  investment  secur- 
ities of  prime  order  and  may  be  discounted  with  bankers  or 
discount  companies  organized  for  the  purpose  at  the  best  ruling 
money  rates,  or  as  quoted  from  time  to  time  by  the  Federal 
Reserve  Banks  in  the  United  States  and  by  the  Bank  of  England 
in  London.  These  bankers'  acceptances  may  even  be  bought 
by  the  very  bankers  who  lend  their  acceptance  to  them,  if  the 
latter  desire  to  make  such  investments.  They  are  readily  con- 
vertible into  cash  at  a  moment's  notice  through  re-sale  to  other 
investors  or  through  re-discount  with  the  Federal  Reserve  Bank. 
Funds  thus  invested  are  therefore  highly  liquid  and  this  feature 
always  appeals  strongly  to  bankers. 

The  advantage  to  all  concerned  of  the  acceptance  system  thus 
roughly  outlined  consists,  first,  in  the  fact  that  when  money  is 
comparatively  easy,  it  is  possible  through  the  discounting  of 
such  bankers'  acceptances  to  secure  a  very  low  annual  interest 
charge,  sometimes  as  low  as  four  per  cent,  per  annum  or  less, 
including  bankers'  charges  for  accepting.  Next,  a  very  great 
advantage  is  found  by  bankers  in  granting  acceptances,  rather 
than  in  buying  the  foreign  bills  of  exchange  themselves,  in  that 
they  do  not  have  to  put  up  any  money  as  they  are  obliged  to 
do  when  they  buy  a  foreign  draft,  unless  in  the  case  of  the 
acceptance  they  want  to  make  an  investment,  and  then  such  an 
investment  can  be  converted  into  cash  at  any  time  prior  to 
maturity  of  the  acceptance. 

The  Federal  Reserve  Board  in  1921  made  six  months  bankers' 
acceptances  available  for  re-discount  by  Federal  Reserve  Banks. 
This  should  be  a  further  help  to  exporters  wishing  to  extend 
such  credits,  although  in  times  of  tight  money  or  financial 
stress  bankers  invariably  prefer  shorter  terms,  not  to  exceed 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      511 

90  days.  Edge  Law  banks  have  been  especially  promoted  to 
grant  longer  terms  as  well  as  make  foreign  investments,  and 
it  is  understood  are  prepared  to  consider  proposals  looking  to 
as  long  as  twelve  months  maturities.  These  facilities,  how- 
ever, have  thus  far  chiefly  been  utilized  by  very  large  shippers 
of  bulk  commodities,  cotton,  grain,  provisions,  etc.,  and  terms 
exceeding  six  months  are  chiefly,  if  not  solely,  contemplated 
in  connection  with  railway  building,  mine  or  other  similar 
developments  in  foreign  countries  where  credits  of  this  descrip- 
tion may  be  required,  as  they  are  not  required  in  the  transaction 
of  any  ordinary  merchandise  business. 

Under  rulings  of  the  Federal  Keserve  Board  bankers  are  per- 
mitted to  finance  transactions  between  buyers  and  sellers  in 
other  countries  not  connected  at  all  with  the  United  States, 
just  as  London  bankers  have  done  for  many  years  past.  If 
this  facility  be  taken  advantage  of,  the  scope  of  financial  opera- 
tions in  the  New  York  market  will  be  greatly  extended. 

In  negotiating  for  a  banker's  acceptance,  a  manufacturer  or 
exporter  introduces  himself  to  a  banker  who  fully  investigates 
the  exporter's  credit  position,  his  banking  and  trade  references, 
etc.  The  exporter  signs  an  acceptance  agreement,  under  which 
he  stands  behind  the  credits  which  are  extended  to  him,  then 
he  draws  a  draft  to  his  own  order  and  endorses  it  in  blank,  and 
almost  always  deposits  with  the  bank,  bills  on  his  foreign  custom- 
ers accompanied  by  the  usual  shipping  documents. 

The  bill  drawn  on  the  bank  is  a  clean  bill  which  the  banker 
stamps  accepted,  payable  at  a  stated  place  and  signs.  At  ma- 
turity the  bank  must  pay  it.  The  purpose  of  creating  a  second 
draft  which  the  bank  accepts  is  to  enable  a  bank  to  refund 
itself. 

The  term  of  the  clean  draft  which  the  banker  accepts  is  usually 
long  enough  to  cover  the  period  which  must  elapse  from  the 
shipment  of  the  goods  to  the  return  of  the  funds.  Suppose,  for 
example,  a  shipment  has  been  made  to  Buenos  Aires  on  sight 
terms.  The  bank  would  probably  figure  that  it  would  take  about 
ninety  days  for  the  goods  to  reach  Buenos  Aires  and  for  the 
funds  to  arrive  back.  Accordingly  the  clean  draft  which  the 
exporter  would  draw  and  which  the  bank  would  accept,  would 
be  at  ninety  days  sight.    When  the  proceeds  of  the  foreign 


512  PRACTICAL  EXPORTING 

collection  are  received,  the  advance  made  to  the  exporter  by  the 
bank  is  paid  off.  Bankers  therefore  consider  their  acceptances 
as  self-liquidating. 

Advances  Against  Consignments  and  Collections. — ^While 
many  special  arrangements  are  possible  in  the  New  York  foreign 
exchange  market,  a  good  many  others  have  been  customary  in 
London,  some  of  which  it  is  worth  mentioning  merely  as  an  in- 
dication of  ways  in  which  bankers'  assistance  may,  under  suit- 
able conditions,  be  invoked  in  the  future,  if  not  to-day. 

In  the  case  of  financially  weak  exporters  sending  goods  to 
buyers  whose  standing  is  well  known  to  an  international  bank- 
ing concern,  it  frequently  awaits  cable  notice  of  acceptance  of 
the  draft  before  making  an  advance.  It  might  be  thought  that 
the  bank  is  secured  by  the  shipping  documents,  but  when  it  is 
remembered  that  the  bank  has  no  means  of  knowing  the  contents 
of  the  shipment  or  whether  they  correspond  to  the  invoice,  it 
becomes  clear  why  it  may  not  regard  such  security  alone  as 
ample. 

It  is  even  possible  in  London  for  shippers  who  are  highly  re- 
garded by  their  bankers  to  arrange  drafts  on  those  bankers,  on 
the  security  represented  by  shipments  to  customers  who  do  not 
accept  drafts  but  send  remittances  when  it  suits  them  within 
certain  terms  of  credit.  Bankers  in  doing  this  sometimes  re- 
quire copies  of  the  invoices  and  of  the  bills  of  lading,  but  such 
operations  are  merely  a  matter  of  faith  and  confidence  in  the 
shippers  on  the  part  of  the  bankers,  and  virtually  amount  to  an 
over-draft  of  the  shippers. 

Methods  frequently  used  in  Europe  in  connection  with  con- 
signments of  merchandise  (consignments  as  distinguished  from 
outright  sales),  include  financing  by  bank  acceptance,  the  bank 
in  this  case  acting  as  agent  of  the  seller.  The  bank  finances  the 
transactions  by  lending  its  acceptance.  It  receives  the  ship- 
ping documents  and  letter  of  hypothecation.  The  consignee  re- 
ceives the  documents  against  a  "letter  of  lien"  and  promises  to 
pay  the  bank  direct  in  first  class  bank  bills  or  by  a  cable  trans- 
fer. If  the  funds  are  not  received  at  maturity  the  consignor  is 
obliged  to  cover  the  bank  in  cash,  or  he  may  draw  again  and 
again  by  paying  an  extra  commission  of  about  one-half  of  1 
per  cent,  every  three  months.     The  business  is  still  financed  by 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      513 

the  bank  through  these  renewals.  This  is  customary  English 
practice,  for  instance,  in  business  with  China. 

At  this  point,  having  noted  some  of  the  ways  in  which  bank- 
ers' capital  and  credit  may  be  utilized  in  export  trading,  we 
may  refer  to  certain  other  facilities  which  they  may  extend  in 
other  phases  of  foreign  operations. 

Some  Ways  of  Collecting-  Open  Accounts. — Collection  of 
open  credit  indebtedness  may  be  made  in  several  ways.  It  may 
be  agreed  that  each  invoice  shall  be  settled  in  so  and  so  many 
days  by  a  direct  remittance  in  London  or  New  York  funds,  or 
remittances  may  be  arranged  each  month  on  the  basis  of  set- 
tling for  items  shipped  30,  60,  90  or  more  days  back ;  or  instead 
of  the  remittance,  the  manufacturer  may  draw  at  sight  or  at 
three  days'  sight,  the  draft  to  be  presented  about  the  time  the 
items  are  due.  Or,  again,  the  manufacturer  may  draw  for  the 
amount  of  an  invoice  at  the  time  of  shipment,  the  bill  maturing 
at  the  expiration  of  the  credit  limit  granted,  but  being  accepted 
at  the  time  of  the  arrival  of  the  goods.  The  latter  system  is 
naturally  favored,  as  it  fixes  a  definite  time  for  the  payment  of 
the  individual  invoice.  The  drafts  in  question,  of  course,  are 
so-called  "clean  bills"  in  contradistinction  to  "documentary 
bills."  The  banks  sometimes,  but  not  often,  buy  these  clean 
bills;  usually  they  only  accept  them  for  collection. 

In  the  British  wool  trade  with  Germany  terms  were  formerly 
"thirty  days  and  three  months'  bill."  The  British  shippers 
forwarded  their  invoices  through  their  local  agents  at  point  of 
destination  with  a  draft  at  three  months  dating  from  the  expira- 
tion of  the  thirty-day  term.  The  agent  for  the  British  princi- 
pals saw  to  it  that  the  draft  was  accepted  by  the  German  cus- 
tomers, returned  it  so  accepted  to  England  where  it  was  dis- 
counted by  the  manufacturers,  its  proceeds  credited  less  ex- 
penses for  discount,  stamps,  etc.,  and  remittance  for  balance,  if 
any,  requested  from  the  buyers. 

In  our  general  consideration  of  ways  of  negotiating  drafts 
through  bankers  we  have  already  seen  how  it  is  sometimes  pos- 
sible to  draw  against  bankers  even  when  goods  have  been 
shipped  on  open  account,  usually  supplying  certified  copy  of 
invoice  and  non-negotiable  bills  of  lading.  With  such  a  draft 
on  a  banker  one  or  more  separate  drafts  on  customers  may  be 


514  PRACTICAL  EXPORTING 

supplied  covering  the  total  amount  involved,  but  at  sufficiently 
shorter  sight  to  enable  bankers  to  secure  proceeds  on  them  from 
customers  before  due  date  of  the  bill  drawn  on  and  accepted  by 
the  bankers.  The  foregoing  are  only  hints  as  to  possibilities 
which  it  is  worth  while  investigating  as  one's  export  trade  ex- 
pands They  should  not  be  undertaken  or  so  much  as  com- 
templated  by  the  beginner. 

COLLECTING  PAST  DUE  FOREIGN  ACCOUNTS 

There  ought  seldom  to  be  any  occasion  in  export  business  for 
forcing  collection  of  any  accounts  save  dishonored  and  protested 
acceptances.  Reference  is  now  made  to  the  ordinary  exporter, 
doing  business  at  long  range.  Most  bad  debts  or  overdue  ac- 
counts with  foreign  customers  result  from  the  extension  of 
open  account  terms  and,  fortunately,  are  usually  for  small 
amounts  of  little  or  no  importance,  that  is,  for  sample  ship- 
ments or  small  balances  which  have  happened  by  chance.  An 
exception  is  to  be  noted,  namely,  when  an  exporter  is  repre- 
sented in  a  foreign  market  by  his  own  branch  house  or  an  agent. 
Then  he  may  sometimes  operate  there  just  as  do  local  concerns 
anywhere.  Collections  in  such  cases  will  be  handled  locally. 
What  we  now  have  to  consider  are  collections  by  Americans 
who  have  no  local  foreign  representation  in  a  debtor's  market. 

Collections  from  foreign  debtors  are  necessarily  more  trouble- 
some than  those  from  domestic  customers.  The  distance  makes 
an  amicable  understanding  less  easy  of  accomplishment.  Ac- 
counts which  cannot  be  amicably  settled  at  home  are  consid- 
ered by  credit  men  bad  enough  but  they  are  far  less  satisfac- 
tory abroad.  But  no  matter  how  small  the  amount,  the  cred- 
itor is  usually  loth  to  lose  it.     What  can  he  do? 

Collection  Letters.— An  attempt  to  adjust  a  foreign  account 
by  correspondence  from  the  home  office  in  the  United  States 
is  an  affair  of  great  delieac3\  No  end  of  tact  and  diplomacj^  is 
absolutely  essential.  In  the  first  pla<;e  it  must  be  remembered 
that  the  seller's  rights  and  obligations  are  governed  by  the  laws 
of  the  foreign  country  where  the  goods  have  been  sold.  Amer- 
ican laws  and  customs  do  not  count.  In  the  next  place  the 
manufacturer  must  remember  that  there  may  often  enough  be 
many  other  causes  for  belated  remittances  than  carelessness  or 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      515 

a  disposition  on  the  part  of  buyers  to  pay  when  they  get  ready, 
irrespective  of  terms  of  sale. 

In  all  countries  of  fluctuating  currencies  the  rate  of  exchange 
from  week  to  week  and  month  to  mouth  governs  remittances  to 
a  large  extent.  A  customer  in  such  a  country  may  feel  sure 
that  by  waiting  a  few  weeks  to  make  remittances  he  will  be 
able  to  save  a  large  amount  of  money,  because  more  favorable 
rates  of  exchange  will  then  prevail.  It  will  not  do  for  a  specific 
manufacturer  to  counter  this  argument  with  the  plea  that  his 
account  is  only  a  small  one,  for  his  customer  may  not  be  regard- 
ing one  account  alone,  but  may  wish  to  group  all  accounts  pay- 
able together  to  take  advantage  of  the  favorable  rate  of  ex- 
change which  he  anticipates.  Furthermore,  while  ocean  mails, 
except  in  times  of  war,  are  reasonably  safe,  yet  loss  or  miscar- 
riage of  mails  does  happen  and  disasters  to  mail  steamers  do 
occur  from  time  to  time.  Valuable  letters  which  have  included 
remittances  may  for  such  reasons  never  arrive. 

However,  making  all  due  allowances  for  conditions  which 
may  excuse  dilatory  tactics  on  the  part  of  one's  customers 
abroad,  yet  there  sometimes  occur  cases  when  it  is  necessarj^  to 
press  for  payments  with  some  firmness.  Assuming  that  a  care- 
ful manufacturer  will  never  have  permitted  the  possibility  of 
an  overdue  account  except  with  customers  whom  he  regards  as 
exceptionally  desirable,  then  it  must  follow  that  extreme  care 
should  be  exercised  to  avoid  giving  such  customers  offense  or 
undue  annoyance.  If  they  are  of  the  sort  which  we  have  as- 
sumed, then  they  will  be  presumably  desirable  customers  in  the 
future  on  some  mutually  satisfactory  terms.  For  a  manufac- 
turer to  permit  his  bookkeeping  department  or  his  domestic  col- 
lection department  to  write  the  short,  stiff  collection  letters  em- 
ployed in  the  United  States,  will  almost  certainly  be  fatal  to 
any  prospects  for  future  trade  with  foreign  customers.  One 
such  letter  addressed  abroad  will  not  only  fail  to  bring  the  de- 
sired remittance  but  so  antagonize  the  customer  that  he  will  be 
disposed  to  give  the  manufacturer  all  the  trouble  possible  in  col- 
lecting the  account  in  question,  and  discontinue  future  business. 

Pleas  to  Induce  Remittances. — There  are  any  number  of 
ways  of  making  urgent  requests  for  prompt  settlement  of  over- 
due accounts.     One  favorite  way  is  to  point  out  that  in  the 


516  PRACTICAL  EXPORTING 

manufacturer's  export  trade  especially  low  prices  have  been 
made  in  the  confident  expectation  that  remittances  will  follow 
on  agreed  upon  terms,  that  it  will  obviously  be  impossible  to 
maintain  such  prices  in  the  future  unless  the  terms  are  rigidly 
adhered  to. 

Again,  it  may  be  pointed  out  that  the  shipper  is  a  manufac- 
turer and  not  a  banker,  that  in  the  United  States  our  business 
is  strictly  a  cash  one  and  that,  owing  to  the  manufacturer's 
great  desire  to  favor  the  particular  customer  in  default,  excep- 
tional terms  were  made  in  his  case  at  best  involving  loss  of  the 
use  of  the  money  involved  for  much  longer  than  is  customary 
here  at  home,  and  that  therefore  the  conduct  of  the  manufac- 
turer's business  will  be  seriously  deranged  if  the  term  of  credit 
granted  is  exceeded.  Or  yet  again,  that  the  margin  of  profit 
in  the  export  prices  that  have  been  quoted  does  not  permit  the 
extension  of  credit  terms. 

The  manufacturer  may  also  employ  a  weapon  that  is  rather 
uncommon  in  the  United  States  but  that  is  frequently  used  by 
Europeans,  namely,  the  demand  for  interest.  It  may  be  pro- 
posed to  the  debtor  that,  on  some  of  the  foregoing  accounts,  it 
is  only  fair  that  interest  on  the  overdue  account  be  paid  not 
merely  for  the  overdue  time  but  from  invoice  date  at  the  rate 
current  in  this  country,  say,  6  per  cent.,  or  at  a  higher  rate  be- 
lieved to  be  customary  in  the  debtor's  country.  This  will  often 
ensure  prompter  attention  on  the  part  of  such  debtors  in  future 
transactions,  in  countries  where  local  rates  of  interest  range  as 
high  as  12  per  cent,  or  18  per  cent,  per  annum.  In  other  coun- 
tries where  a  charge  of  6  per  cent,  only  can  be  made  it  would 
probably  be  well  to  provide  that  it  shall  not  be  made  a  prece- 
dent for  future  business  because  of  the  policy  which  governs 
American  domestic  and  foreign  trade.  Whatever  arguments 
are  adopted,  the  principle  of  unvarying  good  nature  and  tact 
must  not  for  a  single  instant  be  forgotten. 

Kinds  of  Collections. — Open  accounts  are  much  more  diffi- 
cult to  sue  on  in  most  countries  than  claims  based  on  accept- 
ances or  notes.  The  reason  for  this  is  that  in  most  countries  it 
is  unnecessary  to  prove  the  account  item  by  item  where  an  ac- 
ceptance or  note  furnishes  prima  facie  evidence  of  the  claim. 

In  the  case  of  a  claim  by  the  debtor  on  the  shipper  as  an  off- 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      517 

set  in  part  against  the  latter 's  account,  the  shipper  who  cares 
for  his  foreign  trade  will  do  well  to  show  the  utmost  fairness 
and  even  liberality  to  his  customer,  provided  there  is  a  substan- 
tial justification  for  the  claim.  It  may  frequently  be  worth 
while  to  agree  to  an  unjust  claim,  but  to  communicate  the  in- 
cident confidentially  to  mercantile  agencies,  the  export  trade 
press  and  various  organizations  interested,  for  the  protection 
of  American  trade. 

In  the  case  of  insolvency  it  is  best  to  consult-  an  attorney  with 
experience  in  foreign  countries  or  a  bank  having  branches  in 
the  debtor's  place  of  residence.  Many  countries  have  stringent 
regulations  as  to  the  filing  of  claims  against  insolvent  estates 
within  a  certain  time  limit,  or  on  the  subject  of  representation 
of  foreign  claims,  or  with  regard  to  the  form  in  which  powers 
of  attorney  and  proofs  of  claims  are  to  be  made  out.  There  are 
so  many  different  features  of  claims  against  bankrupt  estates 
abroad  that  it  is  unwise  to  handle  them  direct. 

By  far  the  most  usual  cases  in  which  proceedings  against 
debtors  become  necessary  are  those  involved  in  drafts  protested 
either  for  non-payment  or  non-acceptance. 

Care  must  be  taken  to  instruct  the  banks  handling  drafts  to 
protest  same  within  the  legally  required  limit  in  case  of  non- 
payment if  there  is  the  slightest  indication  that  the  account  will 
be  dishonored.  Non-protested  acceptances  in  many  countries 
are  nothing  more  than  mere  evidence  of  indebtedness.  A  pro- 
test by  a  notary  public  is  looked  upon  in  most  foreign  courts  as 
the  only  legal  proof  of  dishonor  and  the  protest  papers  there- 
fore play  an  important  part  in  suing  in  a  foreign  court  in  re- 
spect of  a  dishonored  bill. 

If  the  person  on  whom  a  bill  is  drawn  refuses  to  accept  it  or 
to  pay  it  at  maturity  it  must  in  some  countries  be  "noted," 
that  is,  taken  to  a  notary  public  who  presents  it  for  acceptance 
or  payment  as  required.  If  the  notary  is  refused  he  notes  this 
fact  on  a  ticket  which  is  attached  to  the  bill.  "Noting  a  bill" 
is  in  England  required  as  proof  that  the  bill  has  been  duly  pre- 
sented and  dishonored.  In  addition  to  noting  the  bill  it  must 
be  protested  in  case  it  has  been  dishonored.  This  is  a  legal  for- 
malitj'-  in  which  the  notary  presents  the  bill  for  acceptance  or 
payment  and  if  this  is  withheld  he,  the  notary,  draws  up  a 


518  PRACTICAL  EXPORTING 

declaration  protesting  against  the  refusal  of  the  drawee  to  ac- 
cept or  pay.  When  a  bill  is  either  noted  or  protested,  notice  is 
given  by  the  holder  to  the  last  endorser  of  the  bill  and  also  to 
the  drawer. 

Possible  Procedure  in  Making  Collections. — By  all  means 
the  best  way  of  handling  delinquent  debtors  from  whom  ac- 
counts are  due  is  to  place  the  whole  matter  in  the  hands  of  one's 
resident  agents  in  the  debtors'  territory.  In  default  of  such 
agents  it  will  usually  be  found  profitable  to  abandon  a  small 
claim,  for  in  any  except  accounts  aggregating  considerable 
sums  of  money  it  is  emphatically  true  in  relations  with  foreign 
countries  that  "the  first  loss  is  the  best."  It  is  possible,  of 
course,  to  forward  claims  to  foreign  attorneys  or  collection 
agencies  in  the  debtor's  city  and  this  may  be  done  either  direct, 
or  through  the  many  similar  agencies  in  the  United  States 
which  have  foreign  correspondents.  Great  care  must,  however, 
be  exercised  in  either  case  in  making  a  selection  of  a  foreign  at- 
torney or  collection  agency  of  any  description  and  a  fixed  agree- 
ment arrived  at  as  to  terms  acceptable  for  collection  and  as  to 
the  amount  of  the  costs. 

If  lawyer  or  collection  agency  is  contemplated,  then  legal 
proof  of  claim,  and  usually  assignment,  must  not  be  overlooked. 
No  actual  step  towards  collection  can  otherwise  be  made.  A 
mere  "statement  of  account"  furnishes  a  basis  for  nothing 
more  than  the  emptiest  of  "bluffs"  which  will  impress  no 
debtor.  A  full  and  detailed  story  of  the  whole  transaction  is 
called  for  with  whatever  documents  and  correspondence  (or 
copies  of  them)  may  be  available,  including  especially  debtor's 
original  order  and  proof  of  shipment.  All  must  be  duly  at- 
tested by  affidavits  submitted  in  form  to  give  them  standing  in 
the  foreign  courts  that  may  be  involved.  This  usually  means 
that  the  creditor's  oath  shall  be  taken  before  a  notary  public, 
his  signature  verified  by  the  County  Clerk,  the  latter 's  bj^  the 
Secretary  of  the  State  of  which  the  creditor  is  a  resident,  and 
finally  by  certificate  of  the  resident  consul  of  the  foreign  coun- 
try in  the  creditor's  city.  Sometimes  the  certificates  of  the 
Secretary  of  State  of  the  United  States  will  be  required  attested 
by  the  Minister  or  Ambassador  at  Washington  of  the  debtor's 
country.     Adequate   legal   substantiation   of   a   claim    is.  indis- 


CREDITS,  ACCEPTANCES  AND  COLLECTIONS      519 

pensable  if  any  serious  attempt  at  collection  is  to  be  made. 
Neglect  of  this  primary  essential  means  dangerous  loss  of  time, 
if  nothing  worse. 

Bankers  will  sometimes  forward  drafts  on  delinquent  debtors 
with  instructions  to  their  corresponding  banks  abroad,  if  the 
draft  is  not  paid,  to  turn  it  over  for  collection  to  the  local  at- 
torney usually  employed  by  the  bank  itself.  Many  banks,  how- 
ever, decline  to  accept  the  responsibility  implied  in  following 
this  course.  Even  without  such  disposition  of  the  claim,  that 
is,  its  transfer  to  the  banker's  attorney,  it  is  sometimes  effica- 
cious to  make  such  a  draft,  or  several  repeated  drafts — when 
they  are  passed  through  the  debtor's  own  local  bankers.  The 
debtor  might  pay  no  attention  to  a  draft  of  this  sort  if  pre- 
sented by  local  concerns  with  whom  he  has  no  business  and  for 
whose  opinion  he  does  not  much  care.  But  in  such  instances 
the  debtor  is  usually  rather  jealous  of  his  standing  with  his  own 
bank  and  a  single  draft  with  a  peremptory  letter  attached,  or 
a  series  of  such  drafts,  presented  by  his  own  bank  might  result 
in  payment  when  other  methods  fail. 

Of  course,  no  language  that  is  to  be  described  as  peremptory 
will  ever  be  employed  by  a  creditor  until  ever}^  reasonable  argu- 
ment and  appeal  has  been  exhausted  and  the  point  reached 
where  it  has  become  certain  that  the  delinquent  is  never  again 
wanted  as  a  customer. 

Foreign  Law  and  Lawyers. — Outside  of  a  few  great  coun- 
tries of  the  world  foreign  law^^ers  are  by  no  means  always  of 
the  caliber  of  those  to  whom  we  usually  entrust  our  legal  af- 
fairs in  the  United  States,  although  it  is  to  be  confessed  they 
are  sometimes  quite  as  shrewd.  Their  shrewdness  may,  how- 
ever, react  on  their  American  employers  unless  precaution  has 
been  taken  as  to  amounts  of  their  fees  and  costs.  It  will  usually 
be  found  that  a  foreign  lawyer's  scale  of  fees  appears  decidedly 
modest.  But  as  his  accounts  are  rendered  and  the  total  footed 
up  the  amount  due  will  not  compare  unfavorably  with  expenses 
of  similar  procedure  in  the  United  States. 

Litigation  for  the  collection  of  foreign  accounts  "is  seldom 
satisfactory  and  always  expensive."  Indeed,  it  is  not  too  much 
to  assert  that  costs  of  litigation  abroad  are  usually  prohibitive, 
and  this  is  always  and   emphatically  true   of  small  accounts. 


520  PRACTICAL  EXPORTING 

Furthermore,  delays  of  the  law  are  even  more  exasperating  in 
foreign  countries,  as  a  rule,  than  are  those  of  which  we  com- 
plain at  home.  The  opinion  just  given  may  be  supplemented 
by  that  of  Benjamin  Joy,  when  Vice  President  of  the  Shaw- 
mut  Bank,  of  Boston:  ''Litigation  is  to  be  avoided  in  South 
American  countries  above  everything,  for  the  expense  and 
trouble  often  more  than  outweigh  the  total  value  of  the  goods 
shipped." 

It  is  not  to  be  forgotten  that  the  laws  of  other  countries  are 
not  often  identical  with  our  laws,  in  fact,  usually  are  very  dif- 
ferent from  ours.  When  an  American  creditor  goes  into  a  for- 
eign court  he  makes  himself  subject  to  the  laws  of  the  country 
of  that  court.  American  laws  no  longer  apply  and  foreign 
creditors  are  at  a  great  disadvantage  when  suing  in  many  coun- 
tries. In  some  of  them  a  debtor,  even  if  he  is  in  the  wrong, 
can  force  an  American  creditor  to  put  up  considerable  costs,  as 
a  foreign  plaintiff.  These  costs  may,  at  the  discretion  of  the 
court,  include  a  security  for  the  debtor's  expenditure  in  de- 
fending the  suit.  Of  course,  if  the  creditor  wins,  the  security 
is  returned  to  him.  A  simple  plan  to  avoid  extra  costs  is  to 
sign  a  so-called  "session  of  claim"  in  favor  of  the  foreign  at- 
torney who  then  becomes  the  domestic  creditor  as  the  represent- 
ative of  an  American  principal.  The  costs  are  borne  in  some 
cases  by  each  party  and  not  by  the  losing  party  alone. 

In  general,  American  exporters  will  be  well  advised  in  shun- 
ning foreign  litigation  as  they  would  the  plague,  because  of  its 
expense,  the  time  and  annoyance  involved  and  the  disadvantage 
under  which  they  must  labor  because  absent  from  the  scene 
of  action.  Only  when  an  amicable  adjustment  is  unattainable 
and  at  the  same  time  the  claim  itself  is  more  than  usually  im- 
portant is  it  advisable  as  a  last  desperate  recourse  to  resort  to 
litigation. 


INDEX 


PAGE 

"A.  A.  R,"  Defined 443 

Acceptance — 

DocunieHts  for    ("D.   A.") 497 

Example  of  draft  with,  Form  39.  .    500 

Legal   status  of 501 

System  of  financing  described.  .  .  .    509 

Accounts,  Collection  of 

Advantages  of  acceptances  in  501,   514 

Letters  designed  for    514 

Possible    procedure    in.. 298,    471,   518 

Adapting  Goods  to   Markets 60,   343 

Addresses,     foreign     business.  ...  99,    100 

Advances  of  Cash — 

By    bankers    486,   498,   512 

By  foreign  customers 459,  4B6 

Advertising  Media — 

American,    Kinds   of 202 

Export  trade  papers,  American..  196 
Export  trade  papers,  European..  207 
Foreign    local     196,    206,208 

Advertising  to   Get  Export  Trade — 

As    an    introduction 219 

Copy,    effective    for 213 

Devices  on  shipping  cases 374 

Results    from    220 

Sample  offers  and  prices  in 216 

Agents — 

American    manufacturers'    export.      12 

Cooperation  with 16,   133,  306 

Export  commission  houses  as  267,   272 

Foreign    merchants    as 301 

Not   peddlers    126 

Protection    of    264,   308 

Agents,  Local,  on  Commission — 

Advantages  of 12.   294,   297,   518 

Choice   of,    How   made 289 

Conflict    with    commission   houses.    264 

Contracts  with   291 

Defined    285 

Functions  of,  varied 297 

Responsibility   of    288 

"American  Exporter,"   Quoted — 
Large    and    small    exporters    com- 
pared           55 

Symposium    on    shipping    facilities     51 

American  Exporters'  and  Importers' 
Association — 

Complaints  to 265 

Purpose  of    242 

Armour,  J.  Ogden,  of  Armour  &  Co. 
Opinion  as  to  export  combinations     55 

Arrival   Noti-ce,    of    Railways 389 

Ashburner,  A.  E.,  Foreign  Mgr.,  Am. 
Multigraph  Sales  Co. 
Advises  support  of  agents 133 


PAGE 

Ashburner,   A.    E. — continued 

Opinion    as    to   advertising 213 

Suggestion  as  to  sales  letters 139 

Attestation   of   Documents.  184,    292, 

424,  518 

Austin,  Col.  O.  P.,  Statistical  Expert 

On  international  trade  statistics.  .  6 

Statement  as  to  trade  of  the  world  74 

Australasia,  Australia,  New  Zealand. 

Catalogues  for    240 

Commission   house  trade  with....  247 

Drafts  on,  how  drawn 492 

Invoice  details  for 380 

Markets   in,   characteristics  of .  .  .  .  82 

Non-Dumping    Certificate    required  428 

A  verage,  in  Marine  Insurance 

Defined    439 

Free   of    Particular    (F.P.A.)  .437,  442 

General   and  particular 440,  441 

Ayrcs,    Howard ,     Sec'y,    China    and 
Japan  Trading  Co. 

Opinion  as  to  foreign  banking.  ...  47 

Quoted  on  Merchant  Marine 50 

Baggage,    of    Traveling    Salesmen...  188 

Banks  and  Bankers — 

Assistance    given    by. 26,    43,    481,  504 
Authority  to  Draw,   Forms  28,   30 

464,  466 

Brokers  employed  in   dealing  with  494 

Buy    and    collect   drafts 477,  518 

Cash  advanced  by.. 481,  486,  498,  512 

Charges   for    collecting    drafts....  490 

Confirmation     of     credits     by....  402 

Credit,    Letter  of.   Form  26 462 

Credit,   Notice  of.   Form  27.  ....  .  464 

Credit- Reports,    facilities    for.  .43,  337 

Credits    issued   by 235,   462,  504 

Drafts    issued    by 474 

Foreign  branches  of  American,   42,   46 

Foreign    loans    issued    by 48 

Functions    of    foreign    exchange.  . 

478,  479 

German    Oversea    45 

Guaranty    to.   Form  29 466 

Hypothecation   to.   Form   34 486 

Inland,   methods  of 482 

Instruction  to,  Forms  35.  36,  488,  490 

Introduction   to.    Letters  of 184 

London,    Advantages    of 505 

Rates   of   exchange    quoted   by....  476 

Recourse  by,  on  drawers  of  drafts  487 

Relations     with     consignees    496 

Selling   drafts  to 478,    484,  486 

Barratry,   Defined    448 

521 


522 


INDEX 


PAGE 

Barrett,   Hon.    John,   Director,    Pan 
American    Union 
Opinion  as  to  traveling  salesmen.    166 
Speech    on    Latin    American   trade     78 

Bills  of  Exchange.      See  Drafts. 

Bills  of  Lading,  Ocean 

Certification    of,    consular ...  .423,   426 

"Clean" 4ii0 

Copies  of,  required 415,   455,   488 

Costs  of    406,   415 

Endorsements    of 418 

Freight    forwarders',    explained.  .  .    403 
Freight  forwarders',  Form  10....    404 

How  should  be  written 415,   419 

Liability  .of    shipowners   under...    421 

Minimum     400 

Property   right   in 415,   419,  498 

Styles   of,    Forms    15,    16,    17 

416,   418.   420 

Terms   of,   explained 419 

Bills    of   Lading,    Railway 

Defined    390 

Through  railway.  Form  8 392 

To  inland  foreign  points 394 

Bond,   shipments  in,   Pi'ocedure.  .  .  .    412 

Brandies,  Foreign,  of  American 
Manufacturers 

As  merchants  or  agents 309 

Local  conditions  and  laws  govern.    315 
Unsaleability   of   drafts  against.  .  .    476 

Brazil — 

Distinct   markets    in 79,   293,   303 

Language  of    118,   119 

Sending  advertising  matter  to.  .  .  .    241 

Breakage,  Insurance  against 438 

Brokers — 

Export   houses    not  brokers 501 

Foreign    exchange     494 

Insurance    433 

See  also  agents. 

Bureau  of  Foreign  and  Domestic 
Commerce,  As  source  of  infor- 
mation     22,    24,    26,    113,   349 

Buyers,  of  Commission  Houses 263 

Buying  Ofices,  of  foreign  houses...    248 

Cable,  Use  of  the 

Addresses  for,   registration  of....  151 

Codes,  private,  compilation  of ...  .  155 

Codes,    public,    generally   used....  153 

Code   Words,   use   of 154,    230,  380 

Plain    language    cablegrams 153 

Prices    quoted    by 153,  326 

Repetition  of  messages 157 

Responsibility    in 156 

•'C.  A.   F.,"   Defined 331 

Cartage,  Charges  at  New  York 391 

Cash  Terms — 

American   and   European    39 

Bankers'    credits   equivalent  to...  462 

Cash    with   order 461 

Discounts   for    235,  277 

Partial  payment  in  advance 466 

Catalogues,  E.rport 

Character  of  circulars  and 222 


FAOB 

Catalogues,   Export — continued 

Distribution  of    236,   255 

Duties  on,  in  some  countries 238 

Foreign  language 224 

Preparation  of   225 

Price  and  discount  sheets    231 

Shipments  of,   freight.  .  .238,   367,   380 

Certificates — 

Non  Dumping    428 

Of   Inspection,   etc 383 

Of  Marine  Insurance.  .  .443,  455,  488 
Of    Origin,    illustrated,    Form  21..    428 

Changes  in  Goods,  Making 60,   343 

Cliartering,   tiJiip    395 

Charter  Party,  Explained 396 

Checking   of   Shipments,  Necessary..    149 

Cherington,    P.    T.,    Professor,    Har- 
vard   University — 
Advice  on  character  of  salesmen.  .    164 
Describes   operations   of  salesmen.    186 
Quoted  on  American  export  packing    351 

Chicaneurs,  Defined 148 

C.   I.   F.   Prices — 

Engagements  under.  Form  3 332 

Explained    328 

How  quoted  and  figured 331 

"C.  /.  F.   a  E."  Defined 331 

Circular   Letters,   Kinds   and   Use  of   143 

Circulars,    Printed.     See    also    Cata- 
logues. 
Follow  up   trade  literature 237 

Claims — - 

By  customers,   adjustment  of.  148,  298 

Marine  insurance 453 

Otfsetting  sellers'  accounts 516 

On  carriers 421 

Proof    of,    required    518 

C.  O.  D.  Transactions — 

Freight   forwarders   useful   in....    406 

Sight  drafts  equivalent  to 500 

Unsafe  with  unknown  houses....    336 

Codes.      See  Cable. 

Collections.      See  Accounts. 

"Colonial  Clause,"  in  drafts — 

Illustration   of.   Form   37 492 

Combinations  of  Manufacturers — 

Advantage   of    57,   177 

History    of    313 

In  export   managers    105 

In  own  offices  abroad 57,   312 

In  traveling  man 57,  105,  175 

Legality    of     53 

Similarity    to    commission    houses.    282 

Commercial  Papers,   Rate  of  Postage  388 

Commission  Houses,  Export 

Advantages  of,  to  foreign  buyers.  252 
Branches  and  agents,  abroad....  268 
Brokers,     distinguished    from....    245 

Business    of,    explained 251,   261 

Business  varies  with  markets  269,  272 

Character    of.    varied 244 

Commission    charged   by.    Rates   of  258 

Concessions    to,    special 279,   280 

Conflict  with  established  agents.  264 
Credit  extended  by    252 


INDEX 


523 


PAGE 

Commission    Houses,    Export — continued 

Future  of    282 

Importance  of    243 

Inquiry    for   prices    from,    Form    1  258 

Limitations    of     271,  274 

Merchants,    as    distinguished    from  247 

Order  for  goods  from,   Form  2 .  .  .  260 

Orders    from,    origin    of 221,  263 

Organization    of     257 

Prejudice   against    244 

Relations   with    ....11,    254,    264,  273 

Rislis    incurred    by    276 

Terms  extended  in  selling  to  276,  278 

Travelers    for     270,   274,  280 

Conant,  Charles  A.,  financial  expert — 

Statement   as   to   German  banks .  .  46 

Conferences,    Shipping 

Freight   rates    made   by 53,  400 

"Confirmed"  Credit — 

Notice   of,    illustrated.    Form   27..  464 

Consignments  of  Goods — 

Bankers'    advances    against 512 

Local  agents  as  depositories  of...  299 

Samples    on    consignment 320 

Consular       Documents.      See      Docu- 
ments. 

Consuls,  American 

Catalogues    filed    with 205,  237 

Usefulness    of 24,    25,  337 

Contracts — 

C.   I.   F.   Conditions,  ^orm  3 332 

Sellers  bound  by    344 

With  agents    291 

Conversion    of   Moneys    92 

Copies,  Duplicate  or  Triplicate 

By  different  mails 130,   475,  496 

Correspondence — 

Addresses,    foreign    business.  .  .99,  100 

Circular   letters    143 

Collections,    Making    by     514 

Composition    of    foreign 127,  132 

Copies  of    130,  475 

Despatch   of    109,   111,  124 

Diplomacy    in    148,  514 

Eflficiency    record    for 116 

Export    manager's    ability    in 101 

Facsimile    and    mimeograph   letters  145 

Filing    devices    for    112,  113 

FolIowUp    systems    145 

Form    letters     136 

Languages   to   be   employed    in...  119 

Mailing  lists  for 113,    143,  200 

Postage,  rates  of  foreign 110 

Receipt  of    108,  134 

Replies,    Prepayment   of 131 

Selling    by     10,  137 

Signatures   to    102,  127 

Stationery,    suitable    Ill,  125 

Support  of  foreign   agents  by....  133 

Tone   of   foreign    90,  126 

Translations   of    120 

Costs  of  Goods — 

Affected   by  export  packing 357 

Affected    by    special    processes.  ...  346 

Counting,    Foreign    Methods   of 95 


PAGE 

Credentials,     Of    traveling    men ....  183 

Credit  Reports — 

Character    of     339 

How  obtained 44,   200,   296,  336 

Inquiries   for,    best   form   of    339 

Keeping  up  to  date   342 

Personal   statements   abroad 338 

References  by  foreign  houses.  290,  341 

Credits — 

Agents    as    judges    of 160,  29S 

Bankers'.      See    Letters   of    Credit. 

Commission  liouse    

42,   252,    256,   259,  277 

Delusions     regarding     terms     of.  38,   42 

Long  terms  of,  how  arranged....  502 

On    drafts     498 

Cubic  Measurement    373 

Currencies,  foreign 

Conversion    of    91,   92,  93 

Symbols,    Monetary    95 

Systems  of    90,    188,  333 

Use  of    94,   237,   324,  381 

Custom   Houses — 

Clearing    shipments    at 411 

Shipper's  Manifest,  Form  14 412 

Traveling  men's  experiences  in...  189 

Customs  in  Foreign  Business  Life — 

Counting     95 

Government   control   of   business.  340 

Hours    of    business    189 

"Cwt."      Meaning    Hundred- weight.  370 

"C.  di  F.,"  Defined   331 


"D.  A.,"  Explained    489, 

Damages.      See   Claims  and  Losses. 

"Del   Credere,"   Defined    

Demurrage,    Defined    

Directories — 

As  advertising   media 

Consular   indices    

"Export    Trade   Directory"   quoted 
243,     392, 

World's    Trade     

Detroit  Board   of  Trade — 

Quoted   on    mistakes   of   shippers.. 

Discount    Market     44, 

Discounts — 

Cash   discounts    236, 

Deduction    of,    in    invoices 

European    understanding    of 

How  should  be  named 

Price    and    discount    sheets 

Disputes,   Adjustment   of 

By    correspondence    

Through    local   agents    

Distributors.      See    Merchants    and 

Wholesalers. 
Dock   Receipt    illustrated.    Form    13. 
Documents — 

Attestation  of 184,   292,   424, 

Required     by     bankers 488, 

Documents,   Consular — 

Bills  of  lading,   certification   of... 

Brazilian   invoice.   Form   20 

Certificate   of    Origin,    Form    21.. 


497 

300 
396 

204 
205 

433 
113 

389 
509 

277 
381 
333 
324 
231 

148 
298 


518 
496 

424 
428 
428 


524 


INDEX 


Documents,    Consular — continued 

Cost  of,   not  quoted  in  c.   i.  f 329 

Cuban     invoice,     Form     19 424 

Description    of     goods    in.... 424,   425 

Invoices,     consular 326,   423,   424 

Non-Dumping     Certificates 428 

Where   required,   table 426,    427 

Dollar    Exchange     44 

Douglas,  W.  H.,  of  Arkell  &  Douglas — 

Quoted  as  to  commission  houses.  .    245 
Downs,    William  C,  Commercial 
Attache — 

Explains  insurance 437,   443,   450 

On   commission  houses.. 255,   261,   277 

"D.    P.,"    Explained 489,497 

Drafts,  Foreign,  or  Bills  of  Exchange — 

Acceptance   of    500 

Accepted,    Legal   status   of 501 

Advances  against,   by  bankers....    512 

Against   letters    of   credit 464 

Bankers'      474 

Clean     473 

Collection  of,  by  bankers.  .  .  .    477,   490 

Copies    of,    required    475,   496 

Definition    of    474 

Drawing,    manner   of 475,    491 

Documentary      473,    488 

Endorsements   of 475 

Examining   goods  before  paying..    497 

Extensions    of     501. 

First  and  Second  of  exchange  475,  496 
Inland    bankers,    negotiating    with    482 

Instructions    as    to    handling 488 

Kinds  of  Forms,  31,  32,  33,  35.  .. 

36,   37,    38,    39 

476,    478,    482,    488,    490,    49! 
Negotiating,    through    brokers... 

Objections   by    customers   to 470 

Past  due  accounts  collected  by..  568 
Responsibility  of  drawer  of....  486 
Saleabilitv   of,    how    affected ..  484,   485 

Sale  of,   to  bankers    477,   480 

Security   surrounding    485 

Series  of.  Terms  extended  by....    504 

Sight     476,    496.    499 

Time     477,   500 

Drawback,    Benefit    of 413 

Duties — 

Advertising   matter,    subject   to...    238 

Imposed  on   basis   of   weight 367 

Insurance   of    445 

Packing   as   affected   by    367 

Rates  of,  difficulty  in  estimating.  .  429 
Samples,    subject   to    191 

Embargoes,  export   and   import 346 

Endorsements — 

Of    foreign    drafts     475 

On    .steamship   bills    of   lading....  418 

English    Language — Where    spoken.  119 

Escher,   Franklin,    Author 

Explains  financing   through   banks  505 

On     foreign     exchange    business.  .  478 

Quoted    on    international    finance.  475 

Europe,   Markets   of 

Characteristics  of  trade  in.... 69,  76 


500 
494 


PAGE 

Europe,    Markets   of — continued 

Commission  house  business  in  247,  253 

Open    accounts    with    468 

Expenses    of    Traveling    Salesmen.  .  .    190 
Export  Commission  Houses — 

See   Commission   Houses. 
Export    Department — 

Location    of     103,    104 

Office  systems  for    108 

Specialized    attention    necessary.  .      96 
Export  Manager,   The 

New  York  agent  as 104,  485 

Salary    of     103 

Training    and    qualities    of 97 

Export   Managers,   Combination 105 

"Export  Teclinik,"  German  Text  Books — 

Praises    American    packing 351 

"Export    Trade    Directory" — 

Commission   houses  named   in....    243 
Insurance   companies   named   in.  .    433 

Steamship  services  named  in 392 

"Expositions."       American 57,   313 

Express  Checks,   as  funds 183 

Expresses,   Foreign    402 

"E.  <t  O.  E." — Meaning  of 381 

Farquhar,  A.  B.,  of  Farquhar  &  Co  — 
Quoted   as  to   advertising  devices.    229 

Farrell,  James  A.,  U.   S.   Steel  Corp. 
Quoted    as   to   foreign   credits ....      42 

"F.  A.  a.,"  Meaning  of    327 

Federal  Reserve  Act 504,  506,   509 

Filing  Devices    112 

Financing  Export  Business — 

Sundry    ways    of    458 

Through   local   commission  agents.    297 

"F.    O.    B.,"   Meaning   of 327 

Follow-Vp    Systems     145,   237 

See  also  Correspondence. 

"Force    Majeure,"    Defined 331,   344 

Foreign  Exchange — 
Bills  of.      See  Drafts. 

Brokers     494 

Currencies   employed   in 44 

Dealers    in    477,   480 

Departments   in  banks    478 

Knowledge  of,  by  traveling  men..    188 

Principle     and     rates    of 506 

Value  of  moneys  governed  by .  .  .  .      91 

Forwarders,    Foreign    Freight 

Activities    of,    varied 406 

Advantages   offered  by...  13,   401.   406 
Bill  of  Lading  issued  by.  Form  10  406 

Business    of,     described     401,   403 

Charges  of    405 

Complaints    as    to   operations   of.  .    407 
Facilities  of,   vary   as  to  ports ....    407 

Foreign     expresses,     so-called 402 

Instructions  for  Shipping,   Form  9   404 

Steamship  companies  as    403 

Way   Bill   is.sued   by,  Form   11.  .  .  .    404 
Foivle'r,  John  F.,  of  W.  R.  Grace  &  Co. 
As   to   over-rated   foreign   honesty.    468 
When   special  salesmen  necessary.    271 


INDEX 


i25 


PAGK 

"F,  P.  A." — Free  of  particular  average 

Defined    437,   442,  449 

English    and    American    conditions  44& 

Franklin,     P.    A.     S.,    of    Internat'l 
Merc.   Marine  Co. 

Statement  as  to  world's  steamers.  51 

Freeports     413 

Freight  Charges — 

Economies    in,    possible 253,  405 

Included   in  e.   i.   f.   prices 329 

On   minimum   quantities    401 

Paid  to  foreign  ships 51 

Prepayment    or    collection    of. 400,  406 

Freight  Rates — 

Affected  by  size  of  shipment 401 

Basis  of    397 

Competition    in    53,  399 

Direct  vs.  Transshipment 395 

Fluctuations     in     399 

Primage   on    399 

Quotations    of    397,    405,  407 

French  Language,  Where  Spoken.  .  .  119 

Gardin,  John  E.,  of  National  City  Bank — 
Quoted  as  to  foreign  branch  banks     46 
Statement   as  to   banking  facilities  504 

General    Average     440,   441 

German    Banks     45,      49 

German  Exporters,  Practices  of..  39,      40 

German    Goods    64,      65 

German  Language,  Where  Spoken..  119 
"Go  Downs"— In  the  Far  East...  498 
Gold  Points,  In  Foreign  Exchange.  509 
Goodhue,  F.  A  ,  First  National  Bank 
of  Boston — 
Quoted  on  functions  of  bankers.  .  478 
Guaranty   of  Goods,  Not  Advised...    141 

Barter  Act,   The 421,  436,  454 

Hoisting  on  Board  Steamers — 

Charges  for    328 

Manner   of    354 

See  also  Loading  and  Unloading. 

Hotels,    Foreign     188 

Hundredweight,    Definition   of 370 

Hypothecation — 

Letter  of,   illustrated.  Form  34...  486 

Letter    of,    when    required     512 

Of  documents  to  bankers.  ..  .482,  487 

Importers,   General 

Importance   of.    as   distributors...  198 

Similarity   to   jobbers    88 

"In   Case    of  Need" — 

Clause  in  drafts   489 

Phrase    defined     300 

Draft   including,    Form   37 492 

Indent    Merchants.    Defined 89 

Inquiries  for   Goods — 

Advertising  to   develop 213 

Preliminary   to    orders 221 

Replies  to    135,  137 

Insolvency    of    Debtors 517 

Inspection  of  Goods — 

Certificates    of    383 

Privilege   asked   before  payment.  .  497 


PAQB 

Insurance,  Marine — 

Against    all    risks 437,  442 

Average,    General     440 

Average,     Particular.  ..  .437,   439,  441 

Brokers    and    companies    433 

Certificate    of.     Form    23 442 

Certificates     of 443,   455,  488 

Claims   for   loss   under 453 

Cost  of  premiums  of    .  .  . ' 446 

For  benefit   of  consignees.  ..  .432,  438 

Foreign   duties,    covered   by 445 

"F.    P.    A."     437.   442,  449 

Included  in  c.  i.  f.  prices    329 

Perils   of   the    Sea.    defined.  .  .436,  448 

Policy    of,    illustrated.    Form   22 .  .  440 

Policy    of,    phraseology .  .431,   442,  447 

Principle   of    434 

Protection  under    436,  438 

Underwriters    defined    435 

Values   to  be  declared  for 444 

When   and   how  to   secure    433 

Insurance,  War  Risk — 

Certificate    of.     Form    24 450 

Independent   of   marine 439,  450 

Interpreters,  Use  of 165,  168 

Invoices — 

Attestation     of,     consular ...  .423,  426 

Cable  code   references   in 155 

Consular.      See  Consular  Documents. 

Details,  .special,  when  required  380,  428 

Foreign   bankers   said  to  betray..  43 

Illustration    of.     Form    4 378 

Instructions    from    buyers    as    to..  326 

Manner    of    writing    349,  377 

Required     by     bankers 488 

Signatures    of    381 

Jettison,    Defined     448 

Jobbers — 

Comparatively    rare    abroad 88 

Export  commission  houses  as.. 11,    247 

Johnson,    Alba    B..    Pres.,    Baldwin 
Locomotive    Works — 
Calls  developing  foreign  trade  easy        0 
Opinion  on  brancli  American  banks     47 
Regards    shipping    facilities    ample      50 

Johnston,     Franklin,     of    "American 
Exporter" — 
Opinion    as    to    combination    offices   312 
Quoted  as  to  export  combinations.       54 

"Journal    of   Commerce" — 

Defines    status    bills    of    lading..    422 
Sailings    advertised    in    392 

Eies,  W.  S.,  of  National  City  Bank — 
Opinion  on  building  up  trade.  .  .  .    274 

Labels  and  Marks  of  Origin 348 

Languages — 

.\bility   to   speak    foreign.  99.    164,  166 

Addresses,    foreign,    forms    of.. 99,  100 

English  as  spoken  in  England.  87,  88 

Of    different    countries 119,  236 

Of    the    customer    117 

Translations   of  foreign    117 


526 


INDEX 


PAGB 

Latin  America.     See  also  South  Am- 
erica. 
Commission    house   business   with.    253 
Consular     documents     required    by   423 

Countries   included  in    68 

Foreign    merchants    domiciled    in.    305 

Languages    of     117 

Limitations   of  markets  in    77 

Packing  required  in  shipping  to.  .  351 
Law  and  Lawyers,  Foreiffn.  ..  .518.  519 
Lawsuits,    Foreign,    Undesirable....    149 

Lay  Days,    Defined     390 

Lenkaye,    Insurance    against.  ..  .438,   454 

'•Legal"    Weight,    defined 359 

Letter   of   Advice,   Form   7 382 

Letters    of    Assurance 3^6 

Letter   of   Lien,   Explained 512 

Letters,   Foreign.      See  Correspondence. 
Letters  of  Credit — 

Banker's  Commercial.  .  235,  464,  505 
Dependence  of  N.  Y.  bankers  on.  510 
Draft  drawn  against,  Form  33..  482 
Form    of,    illustrated.    Form    26..    462 

Import     465 

Travelers'    Circular    182 

Letters    of   Introduction    184 

Licenses,   Traveling    Salesmen's.  ...    193 

E.xport      346,   409 

lAghters — 

Insurance  of  cargo  on  board  of.  448 
Loading    and    unloading    from.  .  .  .    356 

New   York    Harbor     390 

"Lloyds,"  Corporation  of 435,   456 

Loading  and  Unloading — 

Ploisting  charges    328 

How   cargo  is   loaded    353 

Insurance  covering    448 

Transshipping    and    unloading....    356 

Loans,  Foreign 48 

Losses,  Shipping 421,   454 

Mading  Lists    113,   143,   200 

Mail    Order  Business  in  Export  Trade      58 

Mail   Time   to   Foreign   Markets 124 

Mails,  Foreign.      See  Postal  Facilities. 
Manufacturing  for  Export — 

Alterations  in  goods.  60,  05,  306,  344 
American  and  European  policies.  .      61 

Finish,    special,    desirable 63,   347 

Grading  of  goods 348 

Instructions  regarding 115,   347 

Markets — 

Adapting   goods   to    00,    344 

Catering  to 65 

Characteristics   of   various 76,    86 

Commission     house     trade     varies 

with     272 

European,    Fear  to   attack    69 

For  raw  and  finished  products...  21 
Geographical    conditions    affect...      23 

Immensity    of   world's    3 

Pro.viinity   of  some  foreign    159 

Relative  v.Tlues  of 68,    14 

Marks  of  Origin  and  Labels 34r 


PAGE 

Marks  on  Export  Packages — 

How    applied     377 

Must    correspond    with    documents 

380,  419 

Necessary    374 

Measurement  Note,  Form   6    382 

Measurements.      See   Weights. 

Merchant  Marine,  American 

Discussion  of    49 

Merchants,  Export 

In  Europe 246.  471 

In  the  United  States.  .  .  .247,    274,  275 

Merchants,  Foreign 

Advantages  of,   as  distributors....  301 

Competing   agencies   held   by    ....  303 

Dangers   of,   as   agents    302,  306 

Honorability  and  character  of .  .  .  .  467 

Support   of,    as   agents 306 

Metric  System  Weights  and  Measures — 

Catalogue   reference  to    230 

Equivalents    of     370,  373 

Where   and   how  used    372 

Middlemen — 

Advantages  of,   at  some  points    .  .  254 

Exports    commission    houses    as.  .  .  244 

Policy    of    doing    business    through  59 

Mistaken  Iminessions — 

Adaptation  of  goods  to  markets.  .  60 

American    trade    not   lagging    ....  37 

Combinations    of    manufacturers..  53 

European  long  credit  terms 38 

Foreign      branches      of      American 

works    42 

Lack  of  American  ships    49 

Money.      See  Currencies. 

Newspapers,    Foreign    208 

New  Zealand.      See  Australasia. 

"Non-Dumping"  Certificates 428 

"Notify"  Clause,  in  bills  of  lading.  .  417 

Noting  of  Drafts,  in  England 517 

Numbers  on  Export  Cases    376 

Office  Systems  for  Export  Dep't.  .  .  .  108 

Open   Accounts — 

Advisability   in    foreign   countries.  467 

Bankers'    advances    against 512 

Defined    468 

Difficulty    in    suing    516 

Local   agents   collectors   of...  298,  471 

Sundry   ways   of  collecting 513 

Opportunities  in  Foreign  Markets — 

Geographical   conditions   affect.  ...  23 

How  learn  about    18 

Prices  of  goods  not  always  affect.  .  28 

Order  Bills  of  Lading 416 

Orders — 

Acceptance  of 343 

Commission    House    ....258,    263,  267 

Exactness   in  filling    18 

Prompt  attention  to,   necessary.  .  .  318 

Records  of    115 

Small,  loca    agents  secure 297 

-nkages.  Paper  or  Poji^^oard 859 


INDEX 


527 


PAGE 

Packing — 

Cases,    crates,  bales,  etc 359,  368 

Charge  for 357,  380 

European   14,  351 

Freight  charges  affect 365 

Import  duties  may  affect 367 

Insecure,    not  to  go   aboard  vessel  422 

Instructions,    buyers',    as   to.. 326,  347 

In.surance    rates    may   affect 442 

Linings    of    packages 361,  442 

Local    requirements    affecting 365 

Lumber  to  be  used  in  cases,  etc. .  .  359 

Mule-back  transport  requirements.  361 

Pilfering,     protection     against....  363 

Preparation  for    358 

Principles  of,   essential   365 

Separation  of  goods  in    366 

Sizes  and  weights  suitable 360 

Strapping    and    sealing    of   cases..  363 

Stuffing   materials     362 

Waterproof  protection  in 362 

Packinp   List    382 

Pan  American  Union 26,  68 

Parcel   Post.   Foreign    385,  386 

Parcel   Receipt,  Form   18 422 

Particular  Average 437,   439,  441 

Parts,   Spare — 

Agents  as  depositories  of .......  .  299 

Lack  of,   handicaps  trade    15 

Must  be  fitted  and  counted 359 

Must  be  invoiced    380 

Passports,  carried  by  travelers 183 

Patents    72 

Payment.  Terms  of.  See  also  Credits, 
Drafts,  Letters  of  Credit,  Open 
Accounts,   etc. 

Bank   credits    462 

British  practices    41 

Cash    terms 39,  461 

Credit   delusions    38,  42 

Drafts,    accepted     501 

Drafts,    documentary     

470,    473,    476,  499 

Drafts,  series   504 

German  practices 39 

Long,  how  may  be  arranged 502 

Net   and   cash,    defined 334 

Open  accounts,   foreign .  .467,  470,  471 

Partial  payment   in   advance.  .235,  466 

Printed    .  ." 235 

Payments,    Partial,    in   advance,    .  .  . 

235,  466 

Peck,  Wm.  E.,  Wm.  E.  Peck  &  Co. — 

Claims  for  commission  houses....  247 

Perils  of  the  Sea,  Defined 436,  448 

Permits,  Shipping 

Illustration    of.    Form    12 410 

Why   dates   of   delivery   specified.,  390 

"Per    Procuration,"     Signatures....  102 

Personal  Statements,  financial 339 

Pilfering — 

Insurance    against 438,   447,  449 

Protection  against   363 

Pools,  Shipping.      See  Conferences. 

Portvguene  Language,  Where  spoken  119 


PAGE 

Postage — 

Uatvs    of   foreign    110 

Reply    coupons     131 

Postal  Facilities  by  foreign  mails 

Commercial    papers    388 

Parcel  post 385 

Sample   post    387 

Pound    Sterling    91 

Power  of  Attorney,  for  use  abroad.  .  184 

Practice,  Export — 

Mistakes  of  manufacturers 14 

Some  basic  rules    17 

Premiums,  Marine  Insurance,  Cost  of  446 

Pi  ices — 

Advertisements,  naming  in 217 

Attractive    quotations   of 34,  232 

Cabling     153,  326 

Changing,    policy    governing.  .233,  326 

C.   I.  F.,  attractiveness  of 328 

Commission    houses,    quotations    to  278 

Delivery   point  affects    327 

Discount  Sheets    231 

Discounts,    what   to   quote.  ..  .232,  324 

Foreign    money,    quoting   in 

234.    324,  381 

Forms   for  quoting    326,  346 

Higher  or  lower,   for  export 35 

"One    Price    Only" 90,   231,  323 

Resale,   difficult  to  dictate  for 323 

Sales    arguments    based    on 28 

Primage,  on  ocean  freight  rates....  399 

Proof  of  claims    518 

Protest,    Notarial 

Advantage  of,    in  case  of  suit.  .  .  .  517 

Instructions  to  banks  regarding.  .  489 

Protest  of  Master  of  Ship,  Form  25.  454 

Quality — 

Appearance    versus    62 

Demand   for  every    33,      64 

Description    of,    in    catalogues....    227 

Quotations.      See  Prices  and  Discounts. 

Railways,  Shipments  by 

Bills   of   lading.  ..  .390,    391,    394,  415 

Cartage   or   lighterage,    charges   on  391 

Freight  should  be  prepaid    391 

How  handled    389 

Insurance  of 438 

Via  Pacific  Coast 393 

Ratings,  Credit.     See  Credit  Reports. 

Redfleld,  Eon.  William  C. 

Quoted  on   question   of  prices....  31 

References — 

Instructions    to    banks    regarding.  489 

Investigation    of    341 

Offered    by    foreign    agents    290 

Offered  by   foreign   merchants....  341 

Sellers  should   offer    141 

Retailers,    Doing    Business    With 

Policy  of 59 

Wholesalers   often   also   retailers .  .  88 

Retail  Shops  in  Foreign  Countries — 

Established  by  some  Americans. 59,  313 

Returning    Ooods 

Expenses  involved   in    466 


528 


INDEX 


PAGE 

Richards,  C.  A.,  Bureau  of  Licenses 
Claims  for  commission  houses.  256,   273 
On      oiaerations       of      commission 
houses    258 

Richards,  G.  II.,  Export  Mgr.,   Rem- 
ington Typewriter  Co. 
Advice  as  to  salesmen.  .  .160,   170,    173 
Quoted   on   foreign   correspondence   101 

Riuff,    Welding,    of    Mailler    &    Que- 
reau — - 
Claims    for   commission    houses...    271 
Commission    houses     seldom     mer- 
chants        247 

Quoted  on  treatment  of  salesmen.    161 

Routes,  Shipping 

Instructions,    buyers',    as   to... 52,   326 
Transshipping    356,    394 

Routes,  Traveling  ISalesmen'a 186 

Russia — 

Catalogues  sent  to 240 

Languages  used  in    ri9 


Salesmen.      See   Traveling    Salesmen. 

Sample  Rooms,  in  foreign  markets..  188 

Samples — 

Commission   houses   distributors   of  255 

Consignments  of 3'20 

Discounts   on    319 

Goods  compared  with 321 

In   the   Foreign   mails    387 

Oliers   of    216,  318 

Traveling   salesmen's.  ...  185,   188,  191 

Selling   (See  Chapters  V  to  IX) 

By  correspondence    10,  137 

Catalogues  must  assist 228 

Sales   arguments    28,  137 

Ways  of,   outlined    10 

Services,   Shipping    50,  392 

Shipping.  See  Chapter  V,  also  un- 
der Bills  of  Lading,  Consular  Doc- 
uments, Forwarders,  Railway, 
Routes,   Services,  Transshipment. 

Shipping,  Ocean 

Formalities  in   409,  415 

In   bond    412 

With  benefit  of  drawback 413 

Ships,    American    49 

Signatures — 

To   correspondence    102,  127 

To  invoices 381 

Simmons,   E.    C,   of   Simmons  Hard- 
ware Co. 

On    appreciation    of    foreigners...  88 

Quoted    as    to    high    class    goods..  32 

Slang,   American 

Impossibility   of  translating 229 

To  be   avoided    90,   126,  229 

Smith,  J.  Russell,  University  of  Penn. 

Quoted  as  to  geography    27 

Statement    as    to    ocean    freights.  .  400 

South  African  Union — 

Catalogues  sent  to   239 

Commission   house   trade  with....  254 

Drafts  on,  form  of   492 


PAGE 

South  African    Union — continued 

Invoice    details    required    for.  .  .  .  380 

Local  agents  in 296,  471 

Markets  of    82 

"Non  Dumping"    Certificates   for.  .  428 

South   America — 

Commission  house  trade  with 244 

Drafts    on    492,  500 

Languages  of 118 

Latin  America  compared  with.  ...  68 

Markets  in,   characteristics  of....  77 

Spanish  Language — 

Catalogues   in,   distribution  of....  236 

Where    spoken    119 

Statement    of    Charges,    Form    5....  382 

Stationery,  Export Ill,   125,  153 

Statistics — 

Of  our  export  trade   ...  .6,  29,  56,  74 

Study   of,    as   a   guide    22 

Stealing.      See  Pilfering. 

Steamships —  ' 

Capacity   of    352 

Liabilities  of 421,  435,  454 

Loading  on  board  of 328,  353 

Ti'ansshipping  and  unloading  cargo  356 

Straight,    Willard,   Am.  Asiatic  Assoc. 

Quoted  in  Begard  to  foreign  loans.  48 

Strapping  Cases 303 

Styles  of  Goods — 

Modification  for  export 60 

Policy  of  varying    61,  344 

Seasonal  changes  in 67 

Substitutions — 

For   American  goods    306 

New  for  old  styles   not  approved.  344 

Siirreyor,    Marine    Insurance 455 

Synd>ols — 

Monetary     95 

Shipping   375 

Tariffs,  Foreign    429 

Terms.      See  Payment. 

Theft.      See   Pilfering 

"Theory  and  Practice  of  Commerce" 

Outlines    international   payments.  .  508 

Quoted   as   to   insurance   claims.  .  .  455 

Times,  London   Newspaper — 

Quoted  as  to  German  goods 65 

Ton,    Shipping,    Defined    397 

Trade  Marks,  foreign    70 

Trade  Papers — 

American    export    197 

European   export    207 

General   foreign    207 

Translations — 

Americanisms  cannot  be  translated  229 

Costs   of    120 

How    obtained     120,  200 

Languages    commonly    requiring.  .  117 

Printers,  by   225 

Quality    of    120 

I'ransshipment — 

Freight  rates  influenced  by.  .  .  .53,  394 

Notification  of    418 

Packing   as   affected   by    356 


INDEX 


529 


Traveling  Salesmen — 

Baggage   carried   by    188 

Careers    as     162,  169 

"Combination"    ....57,    175,    177,  179 
Commission    houses,    work    with .  . 

271,  273 

Conditions    encountered    bj- 

161,    173,  187 

Credentials,   desirable   for 183 

Credits  extended  by    160,  470 

Documents   to  be   carried   by 182 

Export   managers   as 101 

Funds,   how  carried  by 182 

Licenses    required    of     193 

Preparations  for  trips  of    182 

Principals'  relations  to    160 

Qualities     desirable    in..  159,    164,  171 

Routes   of    180 

Samples  of    185,    188,  191 

Selection  of    159,   160,    164,  171 

Training    of     170 

When  to  employ    10,  158 

Trust   Receipt,   Explained    498 

Underwriters,    Insurance    435 

TJnited  Einydom — 

Money  of 91 

Status  of  agents  in    287 

Weights  and  measures  of   370 

Yan,  T  W.,    Koken  Barber  Supply  Co. 
Asserts    salesmen    need    only    Eng- 
lish        167 

Statement   as  to   long  term  credits  42 


PAGE 

"IF.  A."  Defined   442 

n'arranty,  in  M arine  "Insurance.  .  .^  449 

Way  Dill,  Forwarder's,  Form  11.  .  .  .  404 

Weiyht — 

Desirable,  of  cases 360 

Duties  on  basis  of 366 

"Legal"   defined    358 

Net,    Legal   and   Gross,    explained.  367 

Weights  and  Measurements — 

British     370 

Calculating    369 

Cases,    Should    be    marked    with.  .  375 

Catalogues    should    include 230 

Cubic    measure,    how    calculated..  373 

Freight  rates  per 397 

Metric    370 

Wholesalers,  Doing  Business   With 

Often  also  retailers   88 

Policy  of 60 

Wilson,    Woodrow,  President 

Statement    as    to    export    combina- 
tions      54 

Wolfe,  Archibald  J.,  Special  Agent 

Quoted    as    to    long   term    credits..  41 

Statement  on  foreign  branch  banks  45 

Wynian,  W.  F.,  Carter's   Ink  Co. — 

Advice   as  to   follow-up   letters....  145 

Characterizes    export    sales    letters.  137 

Opinion  of  export   advertising.  .  .  .  219 

On    character   of   correspondence..  127 

Statement  as  to  export  departments  97 


7  6  14      6 


This  book  is  DUE  on  the  last  date  stamped  below 

NOV  2  1  193fK  Y  / 
HBr  1^1948 


Torm  L-9-10Hi-2,'31 


H61 


Hough  - 

Practical 

exporting 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


AA    001  008  299 


RBR   Juaa   6,1944 


4^ergrad.U\^g^^_^_^^^ 


HF 

30a3 


UNIVERSITY  of  CAIJPORNI/ 

AT 

LOS   ':'■■' VllsES 


